Question

stans sporting goods is a competitor that can manufacture seven soccer balls out of a soccer net. which statement correctly compares the two businesses?
sabrinas soccer has a comparative advantage over stans sporting goods because sabrinas soccer has a lower opportunity cost.
stans sporting goods has a comparative advantage over sabrinas soccer because stans sporting goods has a lower opportunity cost.
sabrinas soccer has an absolute advantage over stans sporting goods because sabrinas soccer has a lower production cost.
stans sporting goods has an absolute advantage over sabrinas soccer because stans sporting goods has a lower production cost.

Explanation:

To solve this, we recall:

• Comparative Advantage: Ability to produce a good at a lower opportunity cost (what’s given up to produce the good).
• Absolute Advantage: Ability to produce a good with lower production cost (resources used) or more output.

The question involves opportunity cost (key for comparative advantage). The first option states Sabrina’s has a lower opportunity cost, so it has comparative advantage. Other options misapply absolute/comparative or assign advantage incorrectly.

Answer:

A. Sabrina's Soccer has a comparative advantage over Stan's Sporting Goods because Sabrina's Soccer has a lower opportunity cost.