Comparative Advantage Analysis Between Hector and Edwyn
Opportunity Cost Analysis
Hector's Opportunity Cost: For 7 units of pillows, Hector's opportunity cost is 1/7 unit of pillow case. And for 1 unit of pillows, his opportunity cost is 1 unit of pillow case.
Edwyn's Opportunity Cost: For 3 units of pillows, Edwyn's opportunity cost is 1/3 unit of pillow case. And for 1 unit of pillows, his opportunity cost is 1/9 unit of pillow case.
Comparing Opportunity Costs: Hector has a lower opportunity cost for producing pillows, while Edwyn has a lower opportunity cost for producing pillow cases.
Comparative Advantage Analysis
Absolute Advantage: Hector has the absolute advantage in producing pillows, while Edwyn has the absolute advantage in producing pillow cases.
Comparative Advantage: Hector has the comparative advantage in producing pillows, while Edwyn has the comparative advantage in producing pillow cases.
Specialization and Trade
If they specialize and trade, Hector should produce pillows and Edwyn should produce pillow cases.