Graph 3-2 These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
-According to Graph 3-2, if Amy and Jim both specialise in the good in which they have a comparative advantage, total consumption of coffee and total consumption of doughnuts will be _____ respectively.
A)20 and 4
B)4 and 20
C)16 and 7
D)7 and 16

Question

Graph 3-2  These figures illustrate the production possibilities available to Amy and Jim with 8 hours of labour.
-According to Graph 3-2, if Amy and Jim both specialise in the good in which they have a comparative advantage, total consumption of coffee and total consumption of doughnuts will be _____ respectively.
A)20 and 4 
B)4 and 20 
C)16 and 7 
D)7 and 16

Quizplus · Accepted Answer

Amy has a comparative advantage in producing coffee, and Jim has a comparative advantage in producing doughnuts. If they both specialize in the good in which they have a comparative advantage, then Amy will produce more coffee and Jim will produce more doughnuts. This will lead to an increase in the total consumption of both coffee and doughnuts.

Graph 3-2 These Figures Illustrate the Production Possibilities Available