Question

fiona and sophie are both able to produce bows and arrows. the table below shows their opportunity - costs:

	bows	arrows
fiona	20 arrows	.05 bows

given this information, if the two individuals were to beneficially trade with each other in bows and arrows then:

1. fiona should select
2. _ because she select advantage
3. _ in making select
4. sophie should select
5. _ because she has select advantage
6. _ in making select

Explanation:

Step1: Identify comparative - advantage concept

The one with lower opportunity cost has comparative advantage.

Step2: Analyze Fiona's opportunity - cost

Fiona's opportunity cost of making a bow is 20 arrows and of making an arrow is 0.05 bows.

Step3: Analyze Sophie's opportunity - cost

Sophie's opportunity cost of making a bow is 5 arrows and of making an arrow is 0.2 bows.

Step4: Determine Fiona's specialization

Fiona has a lower opportunity cost in making arrows (0.05 bows per arrow compared to Sophie's 0.2 bows per arrow), so she should specialize in and sell arrows.

Step5: Determine Sophie's specialization

Sophie has a lower opportunity cost in making bows (5 arrows per bow compared to Fiona's 20 arrows per bow), so she should specialize in and sell bows.

Answer:

1. specialize in and sell arrows
2. has a comparative
3. arrows
4. specialize in and sell bows
5. has a comparative
6. bows