It takes Barbara 3 hours to make a pie and 4 hours to make a shirt. It takes Gary 2 hours to make a pie and 5 hours to make a shirt. Barbara should specialize in making shirts and Gary should specialize in making pies, then they should trade.

Question

Quizplus · Accepted Answer

Barbara has a comparative advantage in making shirts because she gives up less time (3/4 of a pie per hour of shirt-making) compared to Gary, who gives up 2/5 of a pie per hour of shirt-making. Gary has a comparative advantage in making pies because he can produce them faster (1 pie in 2 hours) compared to Barbara (1 pie in 3 hours). Therefore, specializing and trading based on these advantages would be beneficial for both.

It Takes Barbara 3 Hours to Make a Pie and 4