Question
1) Suppose that in a week I can earn $1000 or finish 5 household tasks, but my partner can earn $1200 or finish 4 household
1) Suppose that in a week I can earn $1000 or finish 5 household tasks, but my partner can earn $1200 or finish 4 household tasks. We both have constant opportunity costs so our PPC's are straight lines. When we were single, I would earn $600 and finish 2 household tasks and she earns $300 and finishes 3 household tasks. Which of the following is true?
A) If we specialize according to absolute advantage then we will earn more income and finish more household tasks.
B) If we specialize according to comparative advantage then we will earn more income and finish more household tasks.
C) If we specialize according to comparative advantage then I will earn income and my partner will focus on the household tasks.
D) If we specialize counter to comparative advantage then our income will increase.
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