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Multiple Choice
Suppose Alice can prepare 10 salads per hour while Bob can prepare 8 salads per hour. Who has the absolute advantage in selling salads?
A
Neither has an advantage
B
Both have the same advantage
C
Bob
D
Alice
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Verified step by step guidance
1
Understand the concept of absolute advantage: it refers to the ability of a person or entity to produce more of a good or service with the same amount of resources or time compared to others.
Identify the production rates given: Alice can prepare 10 salads per hour, and Bob can prepare 8 salads per hour.
Compare the production rates directly since absolute advantage is about who can produce more in the same time frame.
Since 10 salads per hour (Alice) is greater than 8 salads per hour (Bob), Alice has the absolute advantage in preparing salads.
Conclude that Alice has the absolute advantage because she can produce more salads per hour than Bob.