Answered: Robinson and Friday are trapped on an…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Robinson and Friday are trapped on an island together and can produce Fish (F) or Coconuts (C) with the time they have on any given day. Let LF and LC denote labor hours dedicated to fishing or gathering coconuts, respectively.

Robinson's technological relationships for producing coconuts is given by:

CRobinson=14LC

Friday's technological relationship for producing coconuts is given by:

CFriday=12LC

Which of the following is true? (check all that apply)

If Robinson and Friday both use the same (positive) number of hours of labor to harvest coconuts, Robinson will always be able to harvest more.

Robinson has the comparative advantage in coconut production

Friday has the absolute advantage in coconut production

Both Robinson's and Friday's marginal productivity of labor decreases as they spend more time harvesting coconuts

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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