question 1 OTU
3 Points
Suppose company A can produce shovels for $8 each, axes for 512 each, and
rakes for $15 each. Company B can produce shovels for $10 each, axes for
$11 each, and rakes for $17 each. Company A sells each item for $5 more
than its production cost. Company B sells shovels for $13, axes for $15, and
rakes for $18
Which of the following statements is true?
O
A. Company B has a comparative advantage in the production of
shovels
B. Company A has a comparative advantage in the production of
rakes
C. Company has a comparative advantage in the production of
D. Company A has a comparative advantage in the production of
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og

Comparative advantage describes the ability of an enterprise to produce a particular product, goods, or services at a lower price in comparison to rivals. It means that the enterprise uses fewer inputs such as labor, capital, or land to produce. A company with a comparative advantage will manufacture more goods with the same quantity of inputs.

Company A produces rakes at $15 while company B produces at $17. Company A, therefore, has a comparative advantage over company B in the production of rakes. It means company A use fewer resources rakes than company B. Company A can sell rakes at a lower price than company B.

ilana03 ilana03 · Answer 2 · 2021-02-07T02:32:02+01:00

ilana03 ilana03

07-02-2021

Answer: Company B has a comparative advantage in the production of axes.

Explanation:

I put the answer of the guy above me in, the computer said i was wrong and told me this was the correct answer.

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