Use the table below to choose the correct answer. The table outlines the production possibilities of Robinson Crusoe and Joe Friday. If Crusoe and Friday want to maximize their consumption possibilities,
A) Crusoe should specialize in producing good X and Friday in producing good Y, but no trade should be allowed.
B) Crusoe should specialize in producing good X and Friday in producing good Y; trade should occur to maximize joint consumption.
C) Crusoe should specialize in producing good Y and Friday in producing good X; trade should occur to maximize joint consumption.
D) both individuals should strive for self-sufficiency, which always maximizes output.

Question

Use the table below to choose the correct answer. The table outlines the production possibilities of Robinson Crusoe and Joe Friday.  If Crusoe and Friday want to maximize their consumption possibilities,
A) Crusoe should specialize in producing good X and Friday in producing good Y, but no trade should be allowed. 
B) Crusoe should specialize in producing good X and Friday in producing good Y; trade should occur to maximize joint consumption. 
C) Crusoe should specialize in producing good Y and Friday in producing good X; trade should occur to maximize joint consumption. 
D) both individuals should strive for self-sufficiency, which always maximizes output.

Quizplus · Accepted Answer

According to the table, Crusoe has a comparative advantage in producing good X, while Friday has a comparative advantage in producing good Y. By specializing in their respective comparative advantage goods and trading, they can both consume at a point beyond their individual production possibilities curve (PPC) and thus maximize their consumption possibilities. Choosing option A or C, where only one individual specializes in a good and no trade occurs, would not necessarily lead to maximizing joint consumption possibilities. Option D, advocating for self-sufficiency, goes against the principle of comparative advantage and would likely lead to lower total output than if the two individuals specialized and traded.

Use the Table Below to Choose the Correct Answer