Practice prompt · Q:economics-and-market-foundations/compare-comparative-advantage-001

Compare reciprocal opportunity costs

Assign comparative advantage by the lower opportunity cost of each output while recognizing that the less productive producer can still hold one comparative advantage.

Updated Aug 7, 2026 Review due Nov 7, 2026

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Rowan's daily intercepts are 12 reconciliations and 6 forecasts. Vale's are 4 reconciliations and 4 forecasts. Which comparative-advantage assignment follows from the opportunity costs?

Choose the best answer. a Rowan has comparative advantage in both outputs because Rowan has the larger maximum for both. b Rowan has comparative advantage in reconciliations at 0.5 forecast forgone per reconciliation; Vale has comparative advantage in forecasts at 1 reconciliation forgone per forecast. c Vale has no comparative advantage because Vale cannot produce more of either output than Rowan.

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Answer: b

Choice b. Rowan's costs are 0.5 forecast per reconciliation and 2 reconciliations per forecast; Vale's are 1 and 1. Rowan has the lower first cost, and Vale the lower reciprocal cost.