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a) Draw the Production Possibilities Frontier for Dennis and for Janice. Before trade, who (if anyone) has the absolute advantage in the production of laundry and meals? b) Fill in the following chart. Based on your calculations, who has the comparative advantage in laundry and who has the comparative advantage in meals. Laundry Meals Opportunity Opportunity Cost of Cost of Laundry Meals Dennis 20 Janice 20 30 20 c) Assuming that before specialization and trade both Dennis and Janice spend half of their time on each task, what is the total laundry and meal production for the household. Assuming that they specialize and trade, what is the total laundry and meal production for the household? What are the gains from trade?

a) Draw the Production Possibilities Frontier for Dennis and for Janice. Before trade, who (if anyone) has the absolute advantage in the production of laundry and meals? b) Fill in the following chart. Based on your calculations, who has the comparative advantage in laundry and who has the comparative advantage in meals. Laundry Meals Opportunity Opportunity Cost of Cost of Laundry Meals Dennis 20 Janice 20 30 20 c) Assuming that before specialization and trade both Dennis and Janice spend half of their time on each task, what is the total laundry and meal production for the household. Assuming that they specialize and trade, what is the total laundry and meal production for the household? What are the gains from trade?

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
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Problem 2: Comparative Advantage and Gains from Trade Suppose that Dennis and Janice are roommates. If Dennis puts all his effort into doing laundry, he can wash 20 loads per week. if he puts all his effort into cooking meals, he can produce 30 meals. If Janice puts all her effort into doing laundry, she can wash 20 loads per week. If she puts all her effort into cooking meals, she can produce 20 meals. a) Draw the Production Possibilities Frontier for Dennis and for Janice. Before trade, who (if anyone) has the absolute advantage in the production of laundry and meals? b) Fill in the following chart. Based on your calculations, who has the comparative advantage in laundry and who has the comparative advantage in meals. Laundry Meals Opportunity Opportunity Cost of Cost of Laundry Meals Dennis 20 Janice 20 30 20 c) Assuming that before specialization and trade both Dennis and Janice spend half of their time on each task, what is the total laundry and meal production for the household. Assuming that they specialize and trade, what is the total laundry and meal production for the household? What are the gains from trade?
Transcribed Image Text:Problem 2: Comparative Advantage and Gains from Trade Suppose that Dennis and Janice are roommates. If Dennis puts all his effort into doing laundry, he can wash 20 loads per week. if he puts all his effort into cooking meals, he can produce 30 meals. If Janice puts all her effort into doing laundry, she can wash 20 loads per week. If she puts all her effort into cooking meals, she can produce 20 meals. a) Draw the Production Possibilities Frontier for Dennis and for Janice. Before trade, who (if anyone) has the absolute advantage in the production of laundry and meals? b) Fill in the following chart. Based on your calculations, who has the comparative advantage in laundry and who has the comparative advantage in meals. Laundry Meals Opportunity Opportunity Cost of Cost of Laundry Meals Dennis 20 Janice 20 30 20 c) Assuming that before specialization and trade both Dennis and Janice spend half of their time on each task, what is the total laundry and meal production for the household. Assuming that they specialize and trade, what is the total laundry and meal production for the household? What are the gains from trade?
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