Assume there are two types of work that any given person can do: market work and home work. And suppose that people work for a total of 10 hours per day. You can think of market work as a “regular” job. Home work is work done around the house: cooking, cleaning, raising children, etc. Now suppose we have a household comprised of two people, named A and B. Suppose that A can make $50 per hour in market work and can produce $50 of value for an hour of home work as well. Suppose that B can make $25 per hour in market work and can produce $10 of value for an hour of home work. 

(a) Graph A’s and B’s PPF on the same graph (put home work on the vertical axis).

 (b) Who has the absolute advantage in market work? in home work?

 (c) Who has the comparative advantage in market work? 

(d) If each person specializes in one activity, which one should do market work? What is the value of their total production?

Answer rating: 100% (QA)

a Graph of A and B s PPF Homework To 60 50 40 30 20 Jo work Production Possibili... View the full answer