Answer :
a. David has an absolute advantage in producing salads.
b. David has an absolute advantage in producing sandwiches.
c. Andres' opportunity cost of producing one salad is 7.
d. Andres' opportunity cost of producing one sandwich is 35.
e. David's opportunity cost of producing one salad is 75.
f. David's opportunity cost of producing one sandwich is 100.
g. Andres has a comparative advantage in producing salads.
h. David has a comparative advantage in producing sandwiches.
Let's go step by step to explain the process of determining absolute advantage, opportunity cost, and comparative advantage for producing salads and sandwiches between Andres and David.
Given information:
- David can produce 100 salads and 75 sandwiches.
- Andres can produce 35 salads and 7 sandwiches.
- a. Absolute advantage in producing salads:
To determine absolute advantage, we compare the production quantities of salads. David can produce 100 salads, while Andres can produce 35 salads. Since David can produce more salads, he has an absolute advantage in producing salads.
- b. Absolute advantage in producing sandwiches:
To determine absolute advantage, we compare the production quantities of sandwiches. David can produce 75 sandwiches, while Andres can produce only 7 sandwiches. Therefore, David has an absolute advantage in producing sandwiches.
- c. Opportunity cost for Andres to produce one salad:
Opportunity cost refers to the value of the next best alternative given up. In this case, Andres has two options: producing salads or producing sandwiches. Since Andres can produce 7 sandwiches, the opportunity cost of producing one salad is the number of sandwiches he could have made instead, which is 7.
- d. Opportunity cost for Andres to produce one sandwich:
Similarly, Andres has two options: producing salads or producing sandwiches. Since Andres can produce 35 salads, the opportunity cost of producing one sandwich is the number of salads he could have made instead, which is 35.
- e. Opportunity cost for David to produce one salad:
David can produce 75 sandwiches, and his opportunity cost for producing one salad is the number of sandwiches he could have made instead. Therefore, the opportunity cost of producing one salad for David is 75.
- f. Opportunity cost for David to produce one sandwich:
David can produce 100 salads, and his opportunity cost for producing one sandwich is the number of salads he could have made instead. Therefore, the opportunity cost of producing one sandwich for David is 100.
- g. Comparative advantage in producing salads:
To determine comparative advantage, we compare the opportunity costs of producing salads. Andres has an opportunity cost of 7 sandwiches to produce one salad, while David has an opportunity cost of 75 sandwiches. Since Andres has a lower opportunity cost, he has a comparative advantage in producing salads.
- h. Comparative advantage in producing sandwiches:
Similarly, comparing the opportunity costs of producing sandwiches, David has an opportunity cost of 100 salads to produce one sandwich, while Andres has an opportunity cost of 35 salads. Since David has a lower opportunity cost, he has a comparative advantage in producing sandwiches.
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