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Comparative Advantage Activity Name • Terry and Casey are roommates in an apartment. • You want to determine whether they will be better off by doing their own work (being self-sufficient), or specializing and trading with their roommate. In 1 day, Terry can complete 6 loads of laundry or prepare 12 meals. In 1 day, Casey can complete 2 loads of laundry or prepare 12 meals. 1. Definition of absolute advantage: 2. Who has the absolute advantage in laundry? 5. In cooking? 3. De finition of comparative advantage: 4. What is Terry's opportunity cost of doing 1 load of laundry? (= meals/laundry). Casey's? 5. Who has the comparative advantage in laundry? How do you know? 6. What is Terry's opportunity cost of preparing 12 meals? (= laundry/meals). Casey's? 7. Who has the comparative advantage in cooking? How do you know? 8. Self-sufficiency: If you and you roommate were self-sufficient and split your day evenly between laundry and cooking, how many meals and clean loads would you jointly produce? (fill in table) 9. Specialization: If you each spent the day doing the activity in which you have a comparative advantage, how much will you two produce? (fill in table) Clean loads Meals 8. Self-sufficient Terry Casey Total 10. When is total output of the apartment greater? Self-sufficient specialize 11. How can the roommates trade laundry for meals so you both benefit from specialization? 9. Specialize Terry Casey Total (Compare what you have in 8 vs 9 and barter!) 11. After barter: Terry *12. Terry is more capable than Casey. Does that mean he has nothing to gain from trading with his less capable roommate? Explain. Casey *Most important idea to understand from this exercise! ||| {|| ||

Comparative Advantage Activity Name • Terry and Casey are roommates in an apartment. • You want to determine whether they will be better off by doing their own work (being self-sufficient), or specializing and trading with their roommate. In 1 day, Terry can complete 6 loads of laundry or prepare 12 meals. In 1 day, Casey can complete 2 loads of laundry or prepare 12 meals. 1. Definition of absolute advantage: 2. Who has the absolute advantage in laundry? 5. In cooking? 3. De finition of comparative advantage: 4. What is Terry's opportunity cost of doing 1 load of laundry? (= meals/laundry). Casey's? 5. Who has the comparative advantage in laundry? How do you know? 6. What is Terry's opportunity cost of preparing 12 meals? (= laundry/meals). Casey's? 7. Who has the comparative advantage in cooking? How do you know? 8. Self-sufficiency: If you and you roommate were self-sufficient and split your day evenly between laundry and cooking, how many meals and clean loads would you jointly produce? (fill in table) 9. Specialization: If you each spent the day doing the activity in which you have a comparative advantage, how much will you two produce? (fill in table) Clean loads Meals 8. Self-sufficient Terry Casey Total 10. When is total output of the apartment greater? Self-sufficient specialize 11. How can the roommates trade laundry for meals so you both benefit from specialization? 9. Specialize Terry Casey Total (Compare what you have in 8 vs 9 and barter!) 11. After barter: Terry *12. Terry is more capable than Casey. Does that mean he has nothing to gain from trading with his less capable roommate? Explain. Casey *Most important idea to understand from this exercise! ||| {|| ||

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I am struggling to understand this topic so I would like some help with question #2 and questions #4, 5, 6 and 7

Comparative Advantage Activity Name Terry and Casey are roommates in an apartment. • You want to determine whether they will be better off by doing their own work (being self-sufficient), or specializing and trading with their roommate. In 1 day, Terry can complete 6 loads of laundry or prepare 12 meals. In 1 day, Casey can complete 2 loads of laundry or prepare 12 meals. 1. Definition of absolute advantage: 2. Who has the absolute advantage in laundry? 5. In cooking? 3. Definition of comparative advantage: 4. What is Terry's opportunity cost of doing 1 load of laundry? (= meals/laundry) Casey's? 5. Who has the comparative advantage in laundry? How do you know? 6. What is Terry's opportunity cost of preparing 12 meals? (= laundry/meals). Casey's? 7. Who has the comparative advantage in cooking? How do you know? 8. Self-sufficiency: If you and you roommate were self-sufficient and split your day evenly between laundry and cooking, how many meals and clean loads would you jointly produce? (fill in table) 9. Specialization: If you each spent the day doing the activity in which you have a comparative Clean loads Meals advantage, how much will you two produce? (fill in table) 8. Self-sufficient Terry Casey Total 10. When is total output of the apartment greater? Self-sufficient specialize 9. Specialize Terry Casey Total 11. How can the roommates trade laundry for meals so you both benefit from specialization? (Compare what you have in 8 vs 9 and barter!) 11. After barter: Terry *12. Terry is more capable than Casey. Does that mean he has nothing to gain from trading with his less capable roommate? Explain. Casey *Most important idea to understand from this exercise! ||| {|| || ||
Transcribed Image Text:Comparative Advantage Activity Name Terry and Casey are roommates in an apartment. • You want to determine whether they will be better off by doing their own work (being self-sufficient), or specializing and trading with their roommate. In 1 day, Terry can complete 6 loads of laundry or prepare 12 meals. In 1 day, Casey can complete 2 loads of laundry or prepare 12 meals. 1. Definition of absolute advantage: 2. Who has the absolute advantage in laundry? 5. In cooking? 3. Definition of comparative advantage: 4. What is Terry's opportunity cost of doing 1 load of laundry? (= meals/laundry) Casey's? 5. Who has the comparative advantage in laundry? How do you know? 6. What is Terry's opportunity cost of preparing 12 meals? (= laundry/meals). Casey's? 7. Who has the comparative advantage in cooking? How do you know? 8. Self-sufficiency: If you and you roommate were self-sufficient and split your day evenly between laundry and cooking, how many meals and clean loads would you jointly produce? (fill in table) 9. Specialization: If you each spent the day doing the activity in which you have a comparative Clean loads Meals advantage, how much will you two produce? (fill in table) 8. Self-sufficient Terry Casey Total 10. When is total output of the apartment greater? Self-sufficient specialize 9. Specialize Terry Casey Total 11. How can the roommates trade laundry for meals so you both benefit from specialization? (Compare what you have in 8 vs 9 and barter!) 11. After barter: Terry *12. Terry is more capable than Casey. Does that mean he has nothing to gain from trading with his less capable roommate? Explain. Casey *Most important idea to understand from this exercise! ||| {|| || ||
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