Question

You can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. Your roommate can wash, fold, and iron a basket of laun-

dry in three hours and prepare a meal in one hour. Who has the absolute advantage in laundry, and who has an absolute advantage in meal preparation? Who has the comparative advantage in laundry, and who has a comparative advantage in meal preparation?

Short answer

None of us have an absolute advantage in meal preparation.

I have a comparative advantage in laundry and my roommate has a comparative advantage in meal preparation.

Step-by-step solution

Step 1. Given Information.

The information can be summarized as follows:

	Laundry	Meal Preparation
Me	2 hours	1 hour
My roommate	3 hours	1 hour

Step 2. Absolute Advantage.

Absolute advantage is when one can produce more than the other person given the same amount of resources.

Since both I and my roommate have the same meal preparation time there is no absolute advantage.

Step 3. Opportunity Cost.

Opportunity cost is the opportunity forgone to satisfy the wants for the next best alternative.

The opportunity cost for me is the cost of 1 cloth is 2 meals and the opportunity cost for the roommate is the cost of 1 cloth is 3 meals.

Step 4. Comparative Advantage.

Comparative Advantage is for the person who has the lowest opportunity cost.

I have a comparative advantage in the laundry because the opportunity cost is 1 cloth to 2 meals and my roommate has a comparative advantage in meal preparation because the opportunity cost is 1 cloth to 3 meals.