If the workers continue to try and produce both, how many pencils will each worker produce, and how many pens will each worker produce? What is the opportunity cost of producing pencils and for producing pens for each worker? After specialization, how many pencils will be made in total by both workers?

If the workers continue to try and produce both, how many pencils will each worker produce, and how many pens will each worker produce? What is the opportunity cost of producing pencils and for producing pens for each worker? After specialization, how many pencils will be made in total by both workers?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter18: Trading With Other Nations

Section: Chapter Questions

Problem 10AA

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Two workers are currently trying to produce both pens and pencils for a company named We R' Write. Worker A can produce 100 pencils per day or 50 pens. Worker B can produce 100 pencils per day or 20 pens.

If the workers continue to try and produce both, how many pencils will each worker produce, and how many pens will each worker produce?
What is the opportunity cost of producing pencils and for producing pens for each worker?
After specialization, how many pencils will be made in total by both workers?
After specialization, how many pens will be made in total by both workers?
What is the difference in the total number of pencils made by both workers after specialization?
What is the difference in the total number of pens made by both workers after specialization?

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Step 2: Part A - The Productivity of Pencil and Pen Workers:

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