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Use the following information for this question: Assume that the following table illustrates amount of 2 services that can be produced by 2 individuals in one day. For example, Rita could collect 12 coconuts OR catch 6 fish in one day. Coconuts Fish Rita 12 6 Lauren 12 3 According to the principle of comparative advantage... Rita should not engage in trade with Lauren, because she has an absolute advantage in producing fish and is equally productive in producing coconuts. Rita should trade with Lauren for fish, but should not trade coconuts. Rita should specialize in producing fish and Laurent should specialize in producing coconuts. Rita should specialize in producing coconuts and Laurent should specialize in producing fish.

Use the following information for this question: Assume that the following table illustrates amount of 2 services that can be produced by 2 individuals in one day. For example, Rita could collect 12 coconuts OR catch 6 fish in one day. Coconuts Fish Rita 12 6 Lauren 12 3 According to the principle of comparative advantage... Rita should not engage in trade with Lauren, because she has an absolute advantage in producing fish and is equally productive in producing coconuts. Rita should trade with Lauren for fish, but should not trade coconuts. Rita should specialize in producing fish and Laurent should specialize in producing coconuts. Rita should specialize in producing coconuts and Laurent should specialize in producing fish.

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
Section3.2: Comparative Advantage: The Driving Force Of Specialization
Problem 2QQ
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Use the following information for this question: Assume that the following table illustrates amount of 2 services that can be produced by 2 individuals in one day. For example, Rita could collect 12 coconuts OR catch 6 fish in one day. Coconuts Fish Rita 12 6 Lauren 12 3 According to the principle of comparative advantage... Rita should not engage in trade with Lauren, because she has an absolute advantage in producing fish and is equally productive in producing coconuts. Rita should trade with Lauren for fish, but should not trade coconuts. Rita should specialize in producing fish and Laurent should specialize in producing coconuts. Rita should specialize in producing coconuts and Laurent should specialize in producing fish.
Transcribed Image Text:Use the following information for this question: Assume that the following table illustrates amount of 2 services that can be produced by 2 individuals in one day. For example, Rita could collect 12 coconuts OR catch 6 fish in one day. Coconuts Fish Rita 12 6 Lauren 12 3 According to the principle of comparative advantage... Rita should not engage in trade with Lauren, because she has an absolute advantage in producing fish and is equally productive in producing coconuts. Rita should trade with Lauren for fish, but should not trade coconuts. Rita should specialize in producing fish and Laurent should specialize in producing coconuts. Rita should specialize in producing coconuts and Laurent should specialize in producing fish.
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