Musashi and Rina run a catering business in which they have two major tasks: getting new clients and preparing food for events and parties. It takes Musashi 10 hours to prepare the food for an event and 5 hours of effort to get each new client. For Rina, it takes 12 hours to prepare food for an event and 3 hours to get a new client. In this scenario, has an absolute advantage in food preparation, andhas a comparative advantage in food preparation.

Musashi

Musashi

Explanation:

A person has comparative advantage in production if it produces at a lower opportunity cost when compared to other people.

opportunity cost of preparing food

Musashi = 5 / 10 = 0.20

Rina = 3 / 12 = 0.25

Musashi has a lower opportunity cost in food preparation. She has a comparative advantage in food preparation

A person has absolute advantage in the production of a good or service if it produces more quantity of a good when compared to other people

Musashi prepares food in 10 hours while Rina does in 12 hours

Musashi prepares food faster, thus, she has an absolute advantage in good preparation

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