Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cook's time. Vincent can bake 10 cakes or make 5 pizzas in an hour. Jean can bake 12 cakes or make 8 pizzas in an hour. Please answer the four questions below. Which cook has the absolute advantage in baking cakes? Which cook has the absolute advantage in making pizzas? Which cook has the comparative advantage in baking cakes? Which cook has the comparative advantage in making pizzas?

Absolute advantage refers to the amount that can be produced using the same resources. Here the main resource in question is time. For the same amount of time (1 hour) Jean can bake 12 cakes while Vincent can bake 10 cakes.

Similarly, for the same amount of time (1 hour), Jean can make 8 pizzas while Vincent can make 5 pizzas.

Thus, Jean has the absolute advantage in both baking cakes and making pizzas.

Comparative advantage is related to the opportunity cost to produce one product over another.

The opportunity cost for Jean to bake a cake is 2/3 of a pizza, while the opportunity cost for Vincent is 1/2 pizza. The opportunity cost for Jean is greater, so Vincent has the comparative advantage in baking cakes.

The opportunity cost for Jean to make a pizza is 1.5 cakes, while the opportunity cost for Vincent is 2. The opportunity cost for Vincent is greater, so Jean has the comparative advantage in making pizzas.

To maximize production, Vincent should bake cakes and Jean should make pizzas.