Asked by
Mohit bhatt
on Dec 17, 2024
Verified
Consider two individuals, Jarek and Danuta each of whom knits sweaters and makes hamburgers, respectively. The gains from trade between Jarek and Danuta are most obvious in which of the following cases?
A) Jarek is very good at knitting sweaters and at making hamburgers, but Danuta's skills in both of these activities are very poor.
B) Jarek and Danuta both are very good at making hamburgers, but neither has the necessary skills to knit sweaters.
C) Jarek's cooking and knitting skills are very poor, and Danuta's cooking and knitting skills are also very poor.
D) Jarek's skills are such that he can only knit sweaters, and Danuta's skills are such that she can only make hamburgers.
Gains From Trade
The benefits that parties obtain from voluntary trade, where each party can secure goods or services they value more highly than those they trade away.
Knits Sweaters
The craft or process of making sweaters by interlocking loops of yarn with knitting needles.
Hamburgers
A popular sandwich consisting of one or more cooked patties of ground meat, usually beef, placed inside a sliced bread roll or bun.
- Comprehend the fundamental principle of comparative advantage and its significance in the benefits derived from specialization and trade.
- Determine the conditions where trade yields benefits for both parties and countries, notwithstanding the scenario where one entity possesses comprehensive proficiency across all production facets.
Verified Answer
VS
Learning Objectives
- Comprehend the fundamental principle of comparative advantage and its significance in the benefits derived from specialization and trade.
- Determine the conditions where trade yields benefits for both parties and countries, notwithstanding the scenario where one entity possesses comprehensive proficiency across all production facets.