Question

1.    Hank and Barry produce baseballs and bats. The daily production ability for each is specified in the

        table below.

	balls	bats
Hank	4	8
Barry	12	16

        Use the information to determine who has each of the following.

        [a] Absolute advantage in bats.

        [b] Comparative advantage in bats.

        [c]   Absolute advantage in balls.

        [d] Comparative advantage in balls.

Answer 1

{a}

Absolute Advantage in bats

Absolute advantage: The capability to produce more of a given product using less of a given resource than a competing entity.

Barry has the absolute advantage over Hank as he can produce more bats than Hank in same period of time.

It cannot truly be determined by only this information.

{b}

comparative advantage: The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another.

Barry has comparative advantage over Hank as he produce more bats than Hank.

But it cannot be determined truly because information such as margin, time, resource and opportunity are not provided in the question.

{c}

Barry  has absolute advantage in balls over Hank as he produces more balks than Hank.

But also enough information is not provided to determine the true answer.

{d}

Barry has comparative advantage in balls over Hank as he has lesser no. Of balls produced but it cannot be truly determined because information such as margin, cost, opportunity and time period are not provided in the question.