In one hour. Sue can produce 70 caps or 21 jackets and Tessa can produce 50 caps

Question

In one hour. Sue can produce 70 caps or 21 jackets and Tessa can produce 50 caps or 25 jackets. Sue's opportunity cost of producing a cap is jackets and Tessa's opportunity cost of producing a cap is has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage. 0.3; 0.50; Tessa; Tessa gains hut Sue loses 3.3; 2.0; Tessa; both Sue and Tessa gain 0.3; 0.50; Sue; both Sue and Tessa gain 3.3; 2.0; Sue; Sue loses but Tessa gains 0.3; 0.50; Sue; Tessa gains but Sue loses jackets.

Explanation / Answer

Answer is B.

because Sue is opportunity cost ratio is 10;3 , we can denote it as 3.3;1 and for Tessa , it would be 2:1.

so ths sue opportunity cost will be 3.3 and Tessa will be 2. and they both are gaining with the ratio of other good i.e jacket. (one jacket equals to 3.3 capsfor sue and one jacket equals to 2 caps for Tessa)

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