These figures illustrate the production possibilities available to Barney and Betty with 8 hours of labor in their baker
Figure 3-4

-Refer to Figure 3-4.Initially,Barney is spending one-half of his time making pies and the other one-half of his time making bread,and Betty is doing the same.Relative to this initial situation,Barney and Betty could specialize according to the principle of comparative advantage,and both could benefit from this new arrangement,provided they agree that one pie will trade for somewhere between
A)1/2 loaf of bread and 4/3 loaves of bread.
B)2/3 loaf of bread and 2 loaves of bread.
C)3/4 loaf of bread and 2 loaves of bread.
D)3/4 loaf of bread and 5/2 loaves of bread.

Question

These figures illustrate the production possibilities available to Barney and Betty with 8 hours of labor in their baker
Figure 3-4
 
-Refer to Figure 3-4.Initially,Barney is spending one-half of his time making pies and the other one-half of his time making bread,and Betty is doing the same.Relative to this initial situation,Barney and Betty could specialize according to the principle of comparative advantage,and both could benefit from this new arrangement,provided they agree that one pie will trade for somewhere between
A)1/2 loaf of bread and 4/3 loaves of bread. 
B)2/3 loaf of bread and 2 loaves of bread. 
C)3/4 loaf of bread and 2 loaves of bread. 
D)3/4 loaf of bread and 5/2 loaves of bread.

Quizplus · Accepted Answer

Barney can make 2 pies per hour, and Betty can make 1 pie per hour. So, Barney has a comparative advantage in making pies. Betty can make 1 loaf of bread per hour, and Barney can make 1/2 loaf of bread per hour. So, Betty has a comparative advantage in making bread. If Barney specializes in making pies and Betty specializes in making bread, then they can both produce more than they could if they both made both goods. For example, if Barney spends all of his time making pies, he can make 4 pies per hour. If Betty spends all of her time making bread, she can make 2 loaves of bread per hour. So, together they can produce 4 pies and 2 loaves of bread per hour. This is more than they could produce if they both made both goods. The correct answer is A because 1/2 loaf of bread is less than 4/3 loaves of bread, and 4/3 loaves of bread is less than 2 loaves of bread. So, the only answer choice that is consistent with the principle of comparative advantage is A.

These Figures Illustrate the Production Possibilities Available to Barney and Betty