An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. To maximize total output, Jen should specialize in producing ________ while Rich should specialize in producing ________.
A)TVs; radios
B)TVs; TVs
C)radios; TVs
D)radios; both goods

Question

Quizplus · Accepted Answer

To maximize total output, each should specialize in producing the good at which he/she has a comparative advantage. Rich has a comparative advantage in TVs, and Jen has a comparative advantage in radios.

An Economy Has Two Workers, Jen and Rich