Author Question: If an individual can produce a good or service with a lower opportunity cost than another ... (Read 65 times)

theo · **on:** Jun 30, 2018

If an individual can produce a good or service with a lower opportunity cost than another individual, then he or she is said to have the comparative advantage.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Maggie is a potter who likes to dig her own clay for producing pots, cups and other ceramic items. She is aware of two places where she can obtain the right clay for her work. The first field is quite close, just at the edge of town. The second field is 15 miles away and (since there are no access roads) requires a half-day of travel just to get there. Compare the opportunity cost of producing pots using clay from each of these fields.

ecox1012 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

True

Answer to Question 2

The opportunity cost of the clay necessary for her work is higher at the second field. Maggie would have to spend more time traveling, consume more gasoline, and use extra time and energy to dig from the second field.