Figure 3-1
-Refer to Figure 3-1. Assume that Cliff and Paul were both producing wheat and corn, and each was dividing their time equally between the two. Then they decide to specialize in the product they have a comparative advantage in. What would happen to the total production of corn?
A) It would increase by 1 bushel.
B) It would increase by 3 bushels.
C) It would increase by 5 bushels.
D) It would increase by 7 bushels.

Question

Figure 3-1 
-Refer to Figure 3-1. Assume that Cliff and Paul were both producing wheat and corn, and each was dividing their time equally between the two. Then they decide to specialize in the product they have a comparative advantage in. What would happen to the total production of corn?
A) It would increase by 1 bushel. 
B) It would increase by 3 bushels. 
C) It would increase by 5 bushels. 
D) It would increase by 7 bushels.

Quizplus · Accepted Answer

According to the production possibility schedule in Figure 3-1, Cliff's opportunity cost of producing one bushel of corn is 1/2 bushel of wheat, while Paul's opportunity cost of producing one bushel of corn is 1/3 bushel of wheat. This means that Paul has a comparative advantage in producing corn. If both Cliff and Paul specialize in producing the good they have a comparative advantage in, Cliff would produce only wheat (10 bushels) while Paul would produce only corn (9 bushels). This would result in an increase in corn production from 5 to 8 bushels, an increase of 3 bushels.

Figure 3-1 -Refer to Figure 3-1. Assume That Cliff and Paul Were