Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose we have a 2-person world, with only Stephen and his friend LeBron. Suppose that Stephen can move48boxes or bake24cookies in an hour. Suppose that

Suppose we have a 2-person world, with only Stephen and his friend LeBron. Suppose that Stephen can move48boxes or bake24cookies in an hour. Suppose that LeBron could move16boxes or bake4cookies in an hour. Is trade possible? Choose one:A. No, trade isn't possible, because Stephen has an absolute advantage in both making cookies and moving boxes.

B. Yes, trade is possible. Stephen should make cookies while LeBron moves boxes, because Stephen has a comparative advantage in making cookies and LeBron has a comparative advantage in moving boxes.

C. No, trade isn't possible, because LeBron has an absolute advantage in both making cookies and moving boxes.

D. Yes, trade is possible. Stephen should move boxes while LeBron makes cookies, because Stephen has a comparative advantage in moving boxes, whereas LeBron has a comparative advantage in making cookies.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Austro-corporatism Past, Present, Future

Authors: Gunter Bischof

1st Edition

1000675858, 9781000675856

More Books

Students also viewed these Economics questions

Question

Question 1 (a2) What is the reaction force Dx in [N]?

Answered: 1 week ago