1.     Consider two individuals, Teresa and Justin, who produce vegetables. Each uses the same number of workers to produce tomatoes or peppers. Production per lot (in kilograms) is shown in the following table.

	Teresa	Justin
Tomatoes	100	80
Peppers	130	120

 Who has a comparative advantage in producing peppers and tomatoes? Explain

My Attempt: 

Teresa

- Opportunity cost of Tomatoes = 130 / 100 = 1.3 Pepper

- Opportunity cost of Pepper = 100 / 130 = 0.769 Tomato

Justin

- Opportunity cost of Tomatoes = 120/80 = 1.5 Pepper

- Opportunity cost of Pepper = 80/120 = 0.667 Tomato

Teresa has a comparative advantage in the production of Tomatoes because she has a lower opportunity cost (1.3 Pepper vs Justin's 1.5 Pepper).

Justin has a comparative advantage in the production of Peppers because he has a lower opportunity cost (0.667 Tomato vs Teresa's 0.769 Tomato)

Answer (found online, not sure if its correct):

In Teresa’s case, the opportunity cost of tomatoes is 100/130 = 0.76 peppers and the opportunity cost of peppers is 130/100 = 1.3 tomatoes. In case of Justin, the opportunity cost of tomatoes is 80/120 = 0.66 peppers and the opportunity cost of peppers is 120/80 = 1.5 tomatoes. Teresa has a comparative advantage in producing peppers (1.3 < 1.5) and Justin has a comparative advantage in producing tomatoes (0.66 < 0.76). 

Hi, can someone please help me check my attempt? I don't quite understand the answer I found online (not sure if it's even correct in the first place).

Answer rating: 100% (QA)

Your attempt is correct Lets go through the calculations For Teresa The opportunity cost of producin... View the full answer