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Consider Huy and Christian who each have 8 hours available. The production possibilities for Huy and Christian are shown in the table below: it
Consider Huy and Christian who each have 8 hours available. The production possibilities for Huy and Christian are shown in the table below: it shows the respective amounts of exam questions or poems each can produce in 8 hours: Huy Christian Exam questions 20 15 Poems 10 5 Assume that Huy and Christian both derive positive utility from exam questions and poems. Suppose that, if Huy and Christian do not trade, each of them would spend half of the time available on each activity (that is, each spends 4 hours on producing each good). What are the total gains from specialization in the "Huy and Christian economy" if Huy and Christian specialise completely in the activity they have a comparative advantage in (and then trade with each other)? a. The gains from specialization are zero in this case. b. 2.5 exams and 2.5 poems. c. 20 exams and 10 poems. d. 5 exams and 0 poems. e. None of the above.
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