-In the figure above, both Joe and Jill initially produce at point A. If Joe and Jill realize that they each possess a comparative advantage, which outcome can we expect?
A) Joe will specialize in shirts and Jill will specialize in pants.
B) Joe will specialize in pants and Jill will specialize in shirts.
C) Joe and Jill each will be able to consume more than 2 shirts and 2 pairs of pants.
D) Both answers B and C are correct.

Question

-In the figure above, both Joe and Jill initially produce at point A. If Joe and Jill realize that they each possess a comparative advantage, which outcome can we expect?
A) Joe will specialize in shirts and Jill will specialize in pants. 
B) Joe will specialize in pants and Jill will specialize in shirts. 
C) Joe and Jill each will be able to consume more than 2 shirts and 2 pairs of pants. 
D) Both answers B and C are correct.

Quizplus · Accepted Answer

When individuals or countries specialize in producing goods for which they have a comparative advantage, they can trade to achieve an outcome where both parties can consume beyond their initial production possibilities. Thus, if Joe specializes in producing the good for which he has a comparative advantage and Jill does the same, through trade, they can both end up consuming more than they initially could, which includes more than 2 shirts and 2 pairs of pants.

-In the Figure Above, Both Joe and Jill Initially Produce