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Question

Komalavalli · Accepted Answer

Part A
Question 1:
Absolute advantage in terms of hours 
	 
	Market good value
	Home goods value
	Dante
	6
	2
	Anna
	5
	3
From above table we can say that Anna  and Dante both has absolute advantage in production of Home good.
Question2:
	
	Opportunity cost of $1 of market production in terms of market good value
	Opportunity cost of $1 of home good production in terms of Home good value
	Dante
	0
	3
	Anna
	1
	2
Question3:
Dante has comparative advantage in production of market good and Anna has comparative advantage in production of home good.
Question 4:
	 
	Maeket good value
	Home goods value
	 
	Dante
	$36
	$0
	$36
	Anna
	$0
	$39
	$39
	 
	$36
	$39
	$75
Question 5
Yes Dante and Anna are gains from specialization and exchange of goods between them.

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Solution

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