Kim and Kay share an apartment. They cook dinner and do dishes together. So far, they have shared all tasks equally. However, this year, Kim took an economics class and realized there may be gains from specialization and trade. They calculated and found the following opportunity costs for each: Opportunity cost of: 1 dinner. 1 wash (Dish washing) Kim: Kay: 1/2 washes 2 dinners 1/3 washes 3 dinners However, they both know that Kay is better at both cooking dinners and doing dishes. In this case, they can gain from specialization and trade if: They both specialize in both activities. Kim specializes in washing, Kay specializes in cooking dinners. They can't gain from specialization and trade, since Kay is better at both. Kim specializes in cooking dinners, Kay specializes in washing.