If nick and Jesse specialize according to comparative advantage and produce efficiently they can produce a combine total of?Notes: Nick gives up 6 hats to make 3 shirts. Jesse gives up 4 hats to make 8 shirts.Answers are: 10 hats and 11 shirts. 6 hats and 8 shirts. 5 hats and 5.5 shirts. And 4 hats and 3 shirts

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Asked Jan 28, 2019
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If nick and Jesse specialize according to comparative advantage and produce efficiently they can produce a combine total of?
Notes: Nick gives up 6 hats to make 3 shirts. Jesse gives up 4 hats to make 8 shirts.
Answers are: 10 hats and 11 shirts. 6 hats and 8 shirts. 5 hats and 5.5 shirts. And 4 hats and 3 shirts

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Expert Answer

Step 1

To Know the comparative advantage each have on products, the opportunity cost of each person for producing both the products shall be computed:

Nick's Opportunity cost:

Of producing Hats: 3 Shirts / 6 hats = 0.50 shirt per hat (he has to sacrifice 3 shirts for producing 6 hats)

Of producing Shirts =6 hats / 3 shirts = 2 hats ( he has to sacrifice 6 hats for producing 3 shirts)

Likewise, Jesse's opportunity cost:

Of producing shirts = 4 hats /8 shirts = 0.50 hat per shirt ( he has to sacrifice 4 hats for producing 8 shirts)

Of producing Hats= 8 shirts/ 4 hat...

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