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An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Mary's opportunity cost of producing 1 unit of shelter is 2 units of food. Bill's opportunity cost of producing 1 unit of shelter is 4 units of food. Who has a competitive advantage?

Respuesta :

Jseberrio

Answer:

Mary

Explanation:

Mary has a competitive advantage and has a lower opportunity cost than Bill just having to sacrifice 2 units of food for 1 shelter, while Bill has to sacrifice 4 units of food for producing 1 unit of shelter. It is possible to observe this in the production relation:

Mary's productivity:

[tex]\frac{1}{2}=0.5[/tex]

Bill's productivity:

[tex]\frac{1}{4}=0.25[/tex]

We see that Mary has a higher productivity rate, which means that she has the competitive advantage

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