Question
Below are shown the maximum amounts of hats and belts that Buddy can produce each month, and the maximum amounts of hats and belts that
Below are shown the maximum amounts of hats and belts that Buddy can produce each month, and the maximum amounts of hats and belts that Carolyn can produce each month. Buddy. Carolyn
Hats. 100. 300
Belts. 25. 30 1. Who - Buddy or Carolyn - has a comparative advantage over the other in the production of hats? O a. Buddy O b. Carolyn O c. neither Buddy nor Carolyn O d. both Buddy and Carolyn
2. If Buddy and Carolyn specialize according to comparative advantage and trade, what is the maximum amount of belts that the person with a comparative advantage in producing belts will be pay for a hat sold by the other person?
O a. 1 belt O b. 3 belts O c. 4 belts O d. 10 belts
Suppose that Carolyn wakes up one day and discovers that she can now produce, each month, a maximum of 150 belts (although her ability to produce hats does not change). If there is no change in Buddy's ability to produce hats and belts, what does this change in Carolyn's ability to produce belts mean? O a. Carolyn continues to have a comparative advantage at producing belts. O b. Carolyn's comparative advantage, which used to be in producing hats, is now in producing belts. O c. Buddy continues to have a comparative advantage at producing belts. O d. Buddy's comparative advantage, which used to be in producing hats, is now in producing belts. O e. Too little information is given to answer the question.
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