Tova and Ron are the only two people on the planet Melmac. It takes Tova 1 hour to produce a widget and 2 hours to produce a woggle.
It takes Ron 3 hours to produce a widget and 3 hours to produce a woggle.
Based on the information above, Tova and Ron

Question

Quizplus · Accepted Answer

Tova has an absolute advantage in producing both widgets and woggles, but they can still gain from trade by specializing based on comparative advantage. Tova is relatively more efficient at producing widgets (1 hour per widget vs. 2 hours per woggle), while Ron, despite being less efficient overall, has the same opportunity cost for both widgets and woggles (3 hours). By specializing in widgets, Tova can produce them more efficiently, and Ron can specialize in woggles, where his disadvantage is less pronounced compared to widgets. This allows both to benefit from trade.

Tova and Ron Are the Only Two People on the Planet