Alice and Bob each produce haircuts and landscaping services. Alice can provide 4 haircuts in one hour. Bob can provide 2 haircuts in one hour. It takes Alice 2 hours to landscape an acre of property. It takes Bob 1 hour to landscape an acre of property. Assume Alice and Bob both work a standard 8 hour day. If Alice and Bob were to combine forces and open their business "Heads and Hedges" together, how should Alice and Bob allocate their time to maximize the gains from trade with one another? (check all that apply) Alice should only spend her time cutting hair. Bob should only spend his time cutting hair. Bob should only spend his time landscaping. Alice should only spend her time landscaping
Alice and Bob each produce haircuts and landscaping services. Alice can provide 4 haircuts in one hour. Bob can provide 2 haircuts in one hour. It takes Alice 2 hours to landscape an acre of property. It takes Bob 1 hour to landscape an acre of property. Assume Alice and Bob both work a standard 8 hour day. If Alice and Bob were to combine forces and open their business "Heads and Hedges" together, how should Alice and Bob allocate their time to maximize the gains from trade with one another? (check all that apply) Alice should only spend her time cutting hair. Bob should only spend his time cutting hair. Bob should only spend his time landscaping. Alice should only spend her time landscaping
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Alice and Bob each produce haircuts and landscaping services. Alice can provide 4 haircuts in one hour. Bob can provide 2 haircuts in one hour. It takes Alice 2 hours to landscape an acre of property. It takes Bob 1 hour to landscape an acre of property. Assume Alice and Bob both work a standard 8 hour day. If Alice and Bob were to combine forces and open their business "Heads and Hedges" together, how should Alice and Bob allocate their time to maximize the gains from trade with one another? (check all that apply)
Alice should only spend her time cutting hair.
Bob should only spend his time cutting hair.
Bob should only spend his time landscaping.
Alice should only spend her time landscaping.
Expert Solution
Step 1: Define comparative advantage
A country producing a good or service to its particular trading partner with the lowest opportunity in international trade is known as comparative advantage.. Both countries will mutually benefit from trade by concentrating on their cheapest produce.
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