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explain why the total output of milk without specialization is 30?

explain why the total output of milk without specialization is 30?

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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Hi could you explain why the total output of milk without specialization is 30? 

opportunity cost calculated to understand who should do what in this case. But what will I do to that number? Eggs Johnny 30 K 10 F 10 15 Milk Without specialization, Johnny produces combination F Type your answers in all of the blanks and submit For Frankie, the opportunity cost of 1 unit of milk is 1 Eggs 40 20 You are correct Frankie 20 40 Milk Without specialization, Frankie produces combination J units of eggs. For Johnny, the opportunity BUY Author: N Publisher Chapter 1: ... Problem 1QTC Not helpful? Se Stuck hom Ask a question anc answer, in as fast AS
Transcribed Image Text:opportunity cost calculated to understand who should do what in this case. But what will I do to that number? Eggs Johnny 30 K 10 F 10 15 Milk Without specialization, Johnny produces combination F Type your answers in all of the blanks and submit For Frankie, the opportunity cost of 1 unit of milk is 1 Eggs 40 20 You are correct Frankie 20 40 Milk Without specialization, Frankie produces combination J units of eggs. For Johnny, the opportunity BUY Author: N Publisher Chapter 1: ... Problem 1QTC Not helpful? Se Stuck hom Ask a question anc answer, in as fast AS
Step 1 When two individuals, firms, or countries make an exchange of goods and services using their comparative advantage, there will be some gain from this trade due to increased efficiency and better utilization of resources. Step 2 According to the given table, Frankie's opportunity cost of producing milk is 1, and Johnny's opportunity cost of producing milk is 2. Therefore, Frankie has the comparative advantage in milk, and Johnny has the comparative advantage in eggs. Without trade, the total production of milk is 30 units, and the total production of eggs is 30 units. Therefore, the combined output is 60 units. After the trade, Franky will produce only milk, and Johnny will produce only eggs. So, the total production of milk is 40 units, and the total production of eggs is 30 units. Therefore, the combined output is 70 units. Here, the total output is increased by 10 units of milk. Therefore, According to comparative advantage, specialization leads to a gain of 10 units of milk. WAS THIS HELPFUL?
Transcribed Image Text:Step 1 When two individuals, firms, or countries make an exchange of goods and services using their comparative advantage, there will be some gain from this trade due to increased efficiency and better utilization of resources. Step 2 According to the given table, Frankie's opportunity cost of producing milk is 1, and Johnny's opportunity cost of producing milk is 2. Therefore, Frankie has the comparative advantage in milk, and Johnny has the comparative advantage in eggs. Without trade, the total production of milk is 30 units, and the total production of eggs is 30 units. Therefore, the combined output is 60 units. After the trade, Franky will produce only milk, and Johnny will produce only eggs. So, the total production of milk is 40 units, and the total production of eggs is 30 units. Therefore, the combined output is 70 units. Here, the total output is increased by 10 units of milk. Therefore, According to comparative advantage, specialization leads to a gain of 10 units of milk. WAS THIS HELPFUL?
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