Meagan, a contractor, is hired to install cabinets in a new home and has to decide whether to build the cabinets herself or purchase them from a local cabinet shop.
a. Meagan should build the cabinets herself only if
a- the cabinet maker has a comparative advantage in the production of cabinets.
b- she has a comparative advantage in the production of cabinets.
c- she has an absolute advantage in the production of cabinets.
d- the cabinet maker has an absolute advantage in the production of cabinets.
b. If the cabinet maker is foreign rather than local, the answer to part a
a- does change regardless of trade costs.
b- does not change regardless of trade costs.
c- does change as long as trade costs are negligible.
d- does not change as long as trade costs are negligible.

If Meagan has a comparative advantage in the production of cabinets, she should build the cabinets herself because it means that she can build them at a lower cost than the local cabinet store can which means that it will cost less for her to make it than for her to buy it.

If trade costs are negligible this means that they do not change the price of the cabinets significantly so Megan can still use the same decision making criteria she used in the first scenario which means that her decision will not change.