In a week, Luke Skywalker can produce 6 lightsabers or 4 jedi gowns and Yoda can

Question

In a week, Luke Skywalker can produce 6 lightsabers or 4 jedi gowns and Yoda can produce 10 lightsabers or 6 jedi gowns. Who has a comparative advantage in producing lights sabers and who has a comparative advantage in producing jedi gowns?

a. Luke Skywalker has comparative advantage in producing both lighsabers and jedi gowns

b. Yoda has comparative advantage in producing both lighsabers and jedi gowns

c. Lightsabers: Luke Skywalker; jedi gowns: Yoda

d. Lightsabers: Yoda; jedi gowns: Luke Skywalker

a. Luke Skywalker has comparative advantage in producing both lighsabers and jedi gowns

b. Yoda has comparative advantage in producing both lighsabers and jedi gowns

c. Lightsabers: Luke Skywalker; jedi gowns: Yoda

d. Lightsabers: Yoda; jedi gowns: Luke Skywalker

Explanation / Answer

Yoda's opportunity cost of producing lightsabers and jedi gowns are 10 / 6 = 1.67 and 6 / 10 = 0.6 respectively.

Luke Skywalker's opportunity cost of producing lightsabers and jedi gowns are 6 / 4 = 1.5 and

4 / 6 = 0.67 respectively.

So as we know that a country has a comparative advantage in producing a good if its opportunity cost is lower than the opportunity cost of other country.

So from calculation we see that, Luke Skywalker's opportunity cost of producing lightsabers is less than Yoda's opportunity cost of producing lightsabers. So Luke Skywalker has a comparative advantage in producing lightsabers.

And as Yoda's opportunity cost of producing jedi gowns is less than the opportunity cost of producing jedi gowns, so we can say that  Yoda has a comparative advantage in producing jedi gowns.

so the coorect option is (c) Lightsabers: Luke Skywalker; jedi gowns: Yoda.

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