Give and example in which one person has an absolute advantage in doing something but another person has a comparative advantage.
Sure! Let's consider the scenario of two friends, Alice and Bob, who are skilled in different tasks: painting and gardening.
Alice has an absolute advantage in painting because she can complete a painting in 2 hours, while it takes Bob 4 hours to complete the same painting.
On the other hand, Bob has a comparative advantage in gardening because he can complete gardening tasks more efficiently compared to Alice. Let's say Bob can mow the lawn in 1 hour, whereas it takes Alice 2 hours.
So, even though Alice has an absolute advantage in both painting and gardening, she can complete both tasks more quickly than Bob, her comparative advantage lies in painting. However, Bob's comparative advantage lies in gardening.
To determine comparative advantage, we need to compare the opportunity cost of producing one unit of a good or service. In this example, Alice's opportunity cost of painting is 2 hours of gardening, whereas Bob's opportunity cost of gardening is 0.5 hours of painting. Bob's lower opportunity cost makes him more efficient in gardening compared to Alice, giving him a comparative advantage in that particular task.