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Absolute Advantage
A worker has an absolute advantage in the production of a good relative to another if it can produce the good at lower cost or with higher productivity (Armington, 1969). In this model we would say that worker 1 has an absolute advantage in both plumbing and masonry when compared to the worker 2. It is because worker 1 takes less number of hours in both of the activities: plumbing and masonry. In other words:
4< 5, therefore in each of the case worker 1 has an absolute advantage.
Comparative Advantage
A worker has a comparative advantage over the other worker when he/she can produce that good at a lower opportunity cost relative to another worker (Arrow, 1974). Opportunity cost is defined generally as the value of the next best opportunity. In the context of the workers, workers have the opportunities either to work in masonry or plumbing (Chiang. And Masson, 1988). If for example, one worker begins to prefer masonry than plumbing, then he/she has to devote more hours in masonry because he/she has to forego the number of hours that could be used in plumbing. In our case,
4/5 < ae
Therefore we can say that worker 2 has to give less number of hours in masonry for plumbing as compared to worker 1. That means that worker 2 has comparative advantage in plumbing and similarly worker 1 has comparative advantage in masonry. In other words, the opportunity cost of foregoing masonry for worker 1 is less than the opportunity cost of foregoing plumbing for worker 2. Therefore, worker 1 has comparative advantage in masonry and worker 2 has comparative advantage in plumbing.
References
Armington, P. "A Theory of Demand for Products Distinguished by Place of Production." IMF Staff Papers, 16, 1969, 159-78.
Arrow, K.J. "The Theory of Discrimination," in Discrimination in Labor Markets, edited by 0. Ashenfelter and A. Rees. Princeton, NJ: Princeton University Press, 1974.
Chiang. S., and R. Masson. "Domestic Industrial Structure and Export Quality." International Economic Review, 29, 1988, 261-70.
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