If the opportunity cost for producing a particular good is lower for one producer than the other the former producer has a comparative advantage for producing the good.
A producer has a comparative advantage in production if she produces a good or service at a lower opportunity cost when compared with another producer. The producer with a comparative advantage should specialise in the production of that good.
For example, producer A produces 10kg of potatoes and 5kg of rice. Producer B produces 5kg of potatoes and 10kg of rice.
for producer A,
- Opportunity cost of producing potatoes = 5/10 = 0.5
- Opportunity cost of producing rice = 10/5 = 2
for producer B,
- Opportunity cost of producing potatoes = 5/10 = 0.5
- 0pportunity cost of producing beans = 10/5 = 2
Producer A has a comparative advantage in the production of potatoes and producer B has a comparative advantage in the production of rice.
To learn more, please check: https://brainly.com/question/13221821
