In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Aisha can knit 15 sweaters or bake 480 cookies. Which of the following is correct? a. Mohammed has an absolute and a comparative advantage in both tasks. b. Mohammed has an absolute advantage in both tasks and a comparative advantage in knitting sweaters. c. Mohammed has an absolute advantage in both tasks and a comparative advantage in baking cookies. d. Aisha has an absolute advantage in both tasks and a comparative advantage in knitting sweaters. e. Aisha has an absolute and a comparative advantage in both tasks.

d. Aisha has an absolute advantage in both tasks and a comparative advantage in knitting sweaters.

Explanation:

Comparative advantage in economics is the ability of an individual or country to produce a specific good or service at a lower opportunity cost better than another individual or country.

The comparative advantage gives a country a stronger sales margin than their competitors as they are able to sell their specific products or render their peculiar services at a lower opportunity cost.

In 1817, David Ricardo who is an english political economist talked about the law of comparative advantage in his book “On the Principles of Political Economy and Taxation."

Also, the principle of comparative advantage asserts that countries can become better off by specializing in what they do best.

This simply means that, any country applying the principle of comparative advantage, would enjoy an increase in output and consequently, a boost in their Gross Domestic Products (GDP).

An absolute advantage can be defined as the ability of an individual such as a producer to produce a good or provide a service in larger (greater) quantity for the same amount of money or the same quantity at a lesser cost or time. This ultimately implies that, an absolute advantage is the superior capability of an individual over another using the same resources.

Hence, Aisha has an absolute advantage in both tasks (superior capability) and a comparative advantage in knitting sweaters because she can knit 10 more sweaters than Mohammed using the same resources or time.

D. Aisha has an absolute advantage in both tasks and a comparative advantage in knitting sweaters.

Explanation:

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1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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