Exchange and Opportunity Cost ■Abso/ ute advantage One person has an absolute advantage over another if he or she takes fewer hours to perform a task than the other person Comparative Advantage o One person has a comparative advantage over another if his or her opportunity cost of performing a task is lower than the other persons opportunity cost Chapter 2: Comparative Advantage: The Basis for Exchange Slide 6MB MC Chapter 2: Comparative Advantage: The Basis for Exchange Slide 6 Exchange and Opportunity Cost ◼ Absolute advantage ⚫ One person has an absolute advantage over another if he or she takes fewer hours to perform a task than the other person ◼ Comparative Advantage ⚫ One person has a comparative advantage over another if his or her opportunity cost of performing a task is lower than the other person’s opportunity cost