Question
RickandAbbycan, individually produce and consumemilk shakes andtacos in the amounts shown in the columns marked without trade. Person Good Production (without trade) Consumption (without trade)
RickandAbbycan, individually produce and consumemilk shakes andtacos in the amounts shown in the columns marked "without trade".
| Person | Good | Production (without trade) | Consumption (without trade) | Production (with specialization and trade) | Consumption (with specialization and trade) |
|---|---|---|---|---|---|
| Rick | milk shake | 45 | 45 | 70 | 46(keeps) |
| taco | 45 | 45 | 0 | 73(fromAbby) | |
| Abby | milk shake | 12 | 12 | 0 | 24(fromRick) |
| taco | 12 | 12 | 92 | 19(keeps) |
Tired of making everything on their own, Rick andAbbydecide to specialize, andRicktrades24milk shakes toAbbyfor73tacos. The resulting consumption and production is shown in the last two columns of the table above. Compared to their consumption and production before they decided to specialize, what are the gains from trade thatRickexperiences? Choose one:A. 1milk shakeand28tacosB. 70milk shakes and notacosC. 28milk shakes and 1tacoD. nomilk shakes and notacos
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Managerial Economics A Problem Solving Approach
Authors: Luke M. Froeb, Brian T. McCann, Mikhael Shor, Michael R. War
3rd edition
978-1133951483
