You realize that total output would fall if you did some of the typing and ironing and your roommate did some of the typing and ironing. You are each _____

Question

Quizplus · Accepted Answer

This scenario highlights the concept of comparative advantage. Even if both roommates are capable of doing both tasks (typing and ironing), one of them may have a lower opportunity cost (the value of what must be given up in order to perform the alternative task) in doing one of the tasks. By specializing in the task that they have a comparative advantage in, the total output would increase. Therefore, if one roommate does all the typing and the other does all the ironing, they would both be better off in terms of total output. If they were to split the tasks evenly, total output would fall as they are not utilizing their comparative advantage. Thus, the correct answer is C - they are worse off for not exchanging typing and ironing.

You Realize That Total Output Would Fall If You Did