Asked by Jonah Marukot on Jun 24, 2024
Verified
Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, Ellie has a comparative advantage in the production of ice cream.
Comparative Advantage
Comparative advantage is an economic principle that describes the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.
Opportunity Cost
Opportunity cost refers to the value of the next best alternative that is foregone when choosing one option over another.
Ice Cream
A frozen dessert made from dairy products, sweeteners, and flavorings, enjoyed as a treat or snack.
- Illustrate awareness of absolute and comparative advantage pertaining to both domestic and international trade scenarios.
- Examine the fortunes bestowed by specialization and trade upon countries and individuals.
Verified Answer
Learning Objectives
- Illustrate awareness of absolute and comparative advantage pertaining to both domestic and international trade scenarios.
- Examine the fortunes bestowed by specialization and trade upon countries and individuals.
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