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Bill and Hillary produce food and clothing. Inan hour, Bill can produce 1 unit of food
Chapter 3, Problem 11(choose chapter or problem)
Bill and Hillary produce food and clothing. Inan hour, Bill can produce 1 unit of food or 1 unitof clothing, while Hillary can produce 2 unitsof food or 3 units of clothing. They each work10hours a day.a. Who has an absolute advantage in producingfood? Who has an absolute advantage in producingclothing? Explain.b. Who has a comparative advantage in producingfood? Who has a comparative advantagein producing clothing? Explain.c. Draw the production possibilities frontierfor the household (that is, Bill and Hillarytogether) assuming that each spends thesame number ofhours each day as the otherproducing food and clothing.d. Hillary suggests, instead, that she specializein making clothing. That is, she will do all theclothing production for the family; however, ifall her time is devoted to clothing and they stillwant more, then Bill can help with clothingproduction. What does the household productionpossibilities frontier look like now?e. Bill suggests that Hillary specialize in producingfood. That is, Hillary will do all the foodproduction for the family; however, if all hertime is devoted to food and they still wantmore, then Bill can help with food production.What does the household production possibilitiesfrontier look like under Bills proposal?f. Comparing your answers to parts c, d, and e,which allocation of time makes the mostsense? Relate your answer to the theory ofcomparative advantage.
Questions & Answers
QUESTION:
Bill and Hillary produce food and clothing. Inan hour, Bill can produce 1 unit of food or 1 unitof clothing, while Hillary can produce 2 unitsof food or 3 units of clothing. They each work10hours a day.a. Who has an absolute advantage in producingfood? Who has an absolute advantage in producingclothing? Explain.b. Who has a comparative advantage in producingfood? Who has a comparative advantagein producing clothing? Explain.c. Draw the production possibilities frontierfor the household (that is, Bill and Hillarytogether) assuming that each spends thesame number ofhours each day as the otherproducing food and clothing.d. Hillary suggests, instead, that she specializein making clothing. That is, she will do all theclothing production for the family; however, ifall her time is devoted to clothing and they stillwant more, then Bill can help with clothingproduction. What does the household productionpossibilities frontier look like now?e. Bill suggests that Hillary specialize in producingfood. That is, Hillary will do all the foodproduction for the family; however, if all hertime is devoted to food and they still wantmore, then Bill can help with food production.What does the household production possibilitiesfrontier look like under Bills proposal?f. Comparing your answers to parts c, d, and e,which allocation of time makes the mostsense? Relate your answer to the theory ofcomparative advantage.
ANSWER:Step 1 of 6
Q/L (per hour) |
Bill |
Hilary |
Food |
1 |
2 |
Clothing |
1 |
3 |
Since the table above suggests that Hilary can produce both food and clothing in an hour, she has an absolute advantage in producing food and clothing.