Section 1: Specialization and Exchange Numerical Analysis :_ Suppose that Dante and Anna both work in the labor market and perform household tasks. Both Anna and Dante derive utility from only two types of goods home goods (produced with home time) and market goods (purchased with market income). Table 1: Separate Production: both individuals are endowed in the total of 8 hours Question 1: Who has absolute advantage in each type of production? Anna has the absolute advantage in each type of production because Dante can only produce $12/hrof home goods while Anna can produce $13/h; of home goods and Dante can only produce $6/br'of market goods while Anna can produce $13/brof market goods. Table 2: Comparison of the opportunity costs. Question 2: Fill in the values. Round your answer. Opportunity cost of $1 of market Opportunity cost of $1 of home production production in terms of in terms of market goods value home goods value Question 3: Who has comparative advantage in each type of production? The opportunity cost of Anna producing market goods is lower than Dante's so she has the comparative advantage in market goods but the opportunity cost of Dante producing home goods is lower than Anna's so he has the comparative advantage in making home goods. Table 3: Suppose Anna and Dante decide to specialize and produce only the good in which each has their comparative advantage. Question 4: Fill in the values assuming complete specialization. _ _ Question 5: Are there gains from specialization and exchange for Anna and Dante? What makes these gains possible? mbecause before they were producing $164 worth of goods but now they are producing $200. Also. more of each goods are produced as shown with market goods going from $101 to $104 and home goods increasing from $63 to $96. These gains are possible because of specialization with each person working solely on the product for which they have comparative advantage. Even though Anna is better at making both products, specialization allows the both of them to produce more overall