I picked the answer C for both questions. I still am not sure?
Ben-cones 8
Ben-ice cream 2
Jerry-Cones 6
Jerry-Ice Cream 4
According to the tables, Ben as a comparative advantage in:
A) ice cream, and Jerry has an absolute advantage in both goods
B) cones, and Jerry has an absolute advantage in ice cream
C) ice cream, and Jerry has an absolute advantage in neither good
D) ice cream, and Jerry has an absolute advantage in cones.
According to the tables, Ben has an absolute advantage in:
A) cones, and Jerry has a comparative advantage in ice cream
B) both goods, and Jerry has a comparative advantage in cones
C) ice cream, and Jerry has a comparative advantage in cones
D) neither good, nor Jerry has a comparative advantage in ice cream.
I presume that the numbers mean some sort of production in a given period (e.g., "Ben-cones 8" means the number of cones Ben can produce in a time period)
So then, the opportunity cost for Ben to produce 8 cones is 2 ice cream, or 4 cones=1 ice cream. For jerry 1.5 cones=1 ice cream. Ben has a comparative advantage in cones, jerry has a compartitive advantage in ice cream.
In one period, Ben could produce 8 cones to Jerry's 6, Ben has an absolute advantage in producine cones.
To determine who has a comparative advantage in a certain good, we need to compare the opportunity cost for each person. Opportunity cost is the value of the next best alternative that is forgone when a choice is made.
In this case, we have the following numbers of cones and ice cream produced by Ben and Jerry:
Ben:
Cones: 8
Ice cream: 2
Jerry:
Cones: 6
Ice cream: 4
To find the opportunity cost for each person, we can look at the production ratio of cones to ice cream for each individual.
For Ben, the opportunity cost of producing one more cone is 2/8 = 0.25 ice cream cones.
For Jerry, the opportunity cost of producing one more cone is 4/6 = 0.67 ice cream cones.
Comparing the opportunity costs, we can see that Ben has a lower opportunity cost for producing cones (0.25 ice cream cones) compared to Jerry (0.67 ice cream cones). Therefore, Ben has a comparative advantage in cones.
On the other hand, Jerry has a lower opportunity cost for producing ice cream (0.67 cones) compared to Ben (0.25 cones). Therefore, Jerry has a comparative advantage in ice cream.
Now let's look at the answers you provided and determine if they are correct:
According to the tables, Ben has an absolute advantage in:
C) ice cream, and Jerry has an absolute advantage in neither good
This answer is correct. Ben produces more ice cream (2) compared to Jerry (4), so he has an absolute advantage in ice cream.
According to the tables, Ben has a comparative advantage in:
C) ice cream, and Jerry has a comparative advantage in cones
This answer is incorrect. We determined that Ben has a comparative advantage in cones, not ice cream. Jerry has a comparative advantage in ice cream.
In summary:
- Ben has a comparative advantage in cones.
- Jerry has a comparative advantage in ice cream.
Therefore, the correct answers are:
Ben has a comparative advantage in:
B) cones, and Jerry has an absolute advantage in ice cream
Ben has an absolute advantage in:
D) neither good, nor Jerry has a comparative advantage in ice cream.