Consider two individuals (1 and 2) who can produce two different goods (X and Y). They...

 

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Consider two individuals (1 and 2) who can produce two different goods (X and Y). They enjoy having more of both goods, so we can express their levels of satisfaction being equal to X*Y, as we did in class. Below are different scenarios that show their productivity. For each scenario, show how both can be made better off through specialization and trade relative to the happiest they can be in the absence of specialization and trade. X Y A 12 6 B 4 12 XY A 12 6 B4 4 XY A 2 20 B48 X Y A 100 60 B4 4 1. Explain the difference between absolute advantage and comparative advantage. 1. Is it possible for one person to have a comparative advantage in everything? Why or why not? 1. People in very poor countries are usually Jack-of-All-Trades (they know how to do a little bit of everything). Is this a good thing for the country? Why or why not? Consider two individuals (1 and 2) who can produce two different goods (X and Y). They enjoy having more of both goods, so we can express their levels of satisfaction being equal to X*Y, as we did in class. Below are different scenarios that show their productivity. For each scenario, show how both can be made better off through specialization and trade relative to the happiest they can be in the absence of specialization and trade. X Y A 12 6 B 4 12 XY A 12 6 B4 4 XY A 2 20 B48 X Y A 100 60 B4 4 1. Explain the difference between absolute advantage and comparative advantage. 1. Is it possible for one person to have a comparative advantage in everything? Why or why not? 1. People in very poor countries are usually Jack-of-All-Trades (they know how to do a little bit of everything). Is this a good thing for the country? Why or why not?

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To determine how both individuals can be made better off through specialization and trade lets analyze each scenario and compare their production capabilities 1 In Scenario 1 Individual A has an absol... View the full answer