Assume that Natalie and Grace have a garden behind their house and can each pick mushrooms and plums. Each week Natalie can pick a maximum of 20 plums or 100 mushrooms and Grace can pick a maximum of 40 plums or 120 mushrooms. 1. After taking an economics class Natalie goes to her friend Grace and says they can increase production by working together and specializing. Grace says that she would prefer to work alone because she is better at both goods. What type of advantage does Grace have and is she correct in her assessment? 2. Calculate the comparative advantage for both Natalie and Grace for plums and mushrooms 3. Who should specialize in producing mushrooms and who should specialize in producing plums.
Assume that Natalie and Grace have a garden behind their house and can each pick mushrooms and plums. Each week Natalie can pick a maximum of 20 plums or 100 mushrooms and Grace can pick a maximum of 40 plums or 120 mushrooms.
1. After taking an economics class Natalie goes to her friend Grace and says they can increase production by working together and specializing. Grace says that she would prefer to work alone because she is better at both goods. What type of advantage does Grace have and is she correct in her assessment?
2. Calculate the
3. Who should specialize in producing mushrooms and who should specialize in producing plums.
4. Assume that when they did not work together, Natalie picked 10 plums and 50 mushrooms and Grace picked 20 plums and 60 mushrooms. When the decision to instead specialize, how many more total plums and mushrooms were they be able to pick? (No trade rate, just look at overall totals).
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