Exhibit 1-3
-Refer to Exhibit 1-3. Suppose John and Jack can produce the above combinations of candy bars and ice cream bars in one hour. John and Jack can maximize their total production if
A)both produce candy bars.
B)both produce ice cream bars.
C)John produces both candy bars and ice cream bars, while Jack produces nothing.
D)Jack produces both candy bars and ice cream bars, while John produces nothing.
E)each of them produces what he has a comparative advantage in producing.

Question

Exhibit 1-3 
-Refer to Exhibit 1-3. Suppose John and Jack can produce the above combinations of candy bars and ice cream bars in one hour. John and Jack can maximize their total production if
A)both produce candy bars. 
B)both produce ice cream bars. 
C)John produces both candy bars and ice cream bars, while Jack produces nothing. 
D)Jack produces both candy bars and ice cream bars, while John produces nothing. 
E)each of them produces what he has a comparative advantage in producing.

Quizplus · Accepted Answer

Each of them should produce what they have a comparative advantage in producing. In this case, John has a comparative advantage in producing candy bars since he can produce 10 candy bars in the same time it takes to produce 5 ice cream bars. On the other hand, Jack has a comparative advantage in producing ice cream bars since he can produce 4 ice cream bars in the same time it takes to produce 1 candy bar. Therefore, if they specialize in what they are relatively better at producing, they can collectively produce more of both goods.

Exhibit 1-3 -Refer to Exhibit 1-3. Suppose John and Jack Can Produce