Question: How much more coffee does Todd gain from specialization and trade? To answer this question, use must use the information below: Production and Consumption Both Todd and John will have 12 hours to produce. Todd will use 8 hours to produce 80 pounds of chocolate and 4 hours to produce 80 pounds of coffee. John will use 4 hours to produce 80 pounds of chocolate, and 8 hours to produce 80 pounds of coffee. Specialization and Trade Todd's production without Trade Using 4 hours as a the time element - Todd can produce 40 pounds of chocolate and 80 pounds of coffee. opportunity cost for chocolate is 80/40 = 2 opportunity cost for coffee is 40/80 = 1/2 John's production without Trade Using 4 hours as the time element - John can produce 80 pounds of chocolate and 40 pounds of coffee. opportunity cost for chocolate 40/80 = 1/2 opportunity cost for coffee is 80/20 = 2 Without Trade Totals - John and Todd produce 120 pounds of chocolate, and 120 pounds of coffee. Who Should Produce and Trade? Based on comparative advantage, Todd should produce coffee and John should produce chocolate. Specialization and Trade - If both Todd and John and specialize: Todd's Production With Specialization and Trade Todd will use 12 hours to produce only coffee at 20 pounds per hour for a total of 240 pounds of coffee. John's Production with Specialization and Trade John will use 12 hours to produce only chocolate at 20 pounds per hour for a total of 240 pounds of chocolate. With Trade Totals John produces 240 pounds of chocolate and Todd produces 240 pounds of coffee. Each Trade with Each Other John trades 120 pounds of chocolate and Todd trades 120 pounds of coffee. Question: How much more coffee does Todd gain from specialization and trade?
Question: How much more coffee does Todd gain from specialization and trade? To answer this question, use must use the information below:
Production and Consumption
Both Todd and John will have 12 hours to produce. Todd will use 8 hours to produce 80 pounds of chocolate and 4 hours to produce 80 pounds of coffee.
John will use 4 hours to produce 80 pounds of chocolate, and 8 hours to produce 80 pounds of coffee.
Specialization and Trade
Todd's production without Trade
Using 4 hours as a the time element - Todd can produce 40 pounds of chocolate and 80 pounds of coffee.
opportunity cost for coffee is 40/80 = 1/2
John's production without Trade
Using 4 hours as the time element - John can produce 80 pounds of chocolate and 40 pounds of coffee.
opportunity cost for chocolate 40/80 = 1/2
opportunity cost for coffee is 80/20 = 2
Without Trade Totals - John and Todd produce 120 pounds of chocolate, and 120 pounds of coffee.
Who Should Produce and Trade?
Based on
Specialization and Trade - If both Todd and John and specialize:
Todd's Production With Specialization and Trade
Todd will use 12 hours to produce only coffee at 20 pounds per hour for a total of 240 pounds of coffee.
John's Production with Specialization and Trade
John will use 12 hours to produce only chocolate at 20 pounds per hour for a total of 240 pounds of chocolate.
With Trade Totals
John produces 240 pounds of chocolate and Todd produces 240 pounds of coffee.
Each Trade with Each Other
John trades 120 pounds of chocolate and Todd trades 120 pounds of coffee.
Question: How much more coffee does Todd gain from specialization and trade?
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