Question

Steve can​ wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. His roommate Mike can​ wash, fold, and iron a basket of laundry in three hours and prepare a meal in one hour. The absolute advantage in laundry is held by A. Mike. B. Steve. C. neither person. The comparative advantage in meal preparation is held by A. Steve. B. Mike. C. neither person.

Answer 1

Answer: The absolute advantage in laundry is held by Steve while the comparative advantage in meal preparation is held by Mike.

Step-by-step explanation:

Absolute advantage is when an individual, firm or country can produce a good or service at a lower cost when compared to the other economic agent. When someone has absolute advantage, it means that the person uses fewer resources and spends less time in producing the good. Based on the explanation, Steve has absolute advantage in laundry since he spends two hours compared to Mike who uses 3hours.

Comparative advantage is when an individual, firm or government can produce a good or service with a lower opportunity cost when compared to the other person. Mike has a comparative advantage in the preparation of meal. It'll be better for Steve to focus his attention on laundry while Mike does the meal.