What is comparative advantage? Give an example. What will be ...

[melly21297]

What is comparative advantage? Give an example.
 
  What will be an ideal response?

Question 2

In which of the following cases would the supply of loanable funds curve shift rightward?
 
  A) Investment demand increases.
  B) The stock market booms, so people's wealth increases.
  C) In June, Sally learns that at year's end she will receive a bonus that will double her current salary.
  D) The economy moves into a recession.
  E) Joe is worried about cutbacks at his firm, so his expected future income falls.

[brittanywood]

Answer to Question 1

Comparative advantage is the ability of a person to produce a good at a lower opportunity cost compared to another person. A lower opportunity cost means that the person gives up less to produce the good compared to another person. For example, one person may need to give up one hour of typing to get dinner made while another person must give up two hours of typing to produce the same dinner.

Answer to Question 2

E

[melly21297]

Excellent

[xthemafja]

TYSM