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-(Table: Fish and Coconut Production Possibilities)Use Table: Fish and Coconut Production Possibilities.The table shows the maximum number of fish and coconuts that Tom and Hank can produce if they produce only one good.In the absence of trade,Tom produces and consumes 9 fish and 2 coconuts,and Hank produces and consumes 3 fish and 2 coconuts.Now they decide to engage in trade.Which statement is INCORRECT?
A)For both to become better off,each should specialize in the production of some good.However,since Hank is equally productive in both goods,it doesn't matter which good each specializes in.
B)For both to become better off,each should specialize completely in the production of the good in which he has a comparative advantage.
C)After trade,it is possible for Tom to consume 9 fish and 2.5 coconuts and for Hank to consume 3 fish and 2.5 coconuts.
D)For each individual,the consumption point after trade will lie outside that individual's production possibility frontier.

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Use the following to answer question:

-(Table: Fish and Coconut Production Possibilities)Use Table: Fish and Coconut Production Possibilities.The table shows the maximum number of fish and coconuts that Tom and Hank can produce if they produce only one good.In the absence of trade,Tom produces and consumes 9 fish and 2 coconuts,and Hank produces and consumes 3 fish and 2 coconuts.Now they decide to engage in trade.Which statement is INCORRECT?
A)For both to become better off,each should specialize in the production of some good.However,since Hank is equally productive in both goods,it doesn't matter which good each specializes in. 
B)For both to become better off,each should specialize completely in the production of the good in which he has a comparative advantage. 
C)After trade,it is possible for Tom to consume 9 fish and 2.5 coconuts and for Hank to consume 3 fish and 2.5 coconuts. 
D)For each individual,the consumption point after trade will lie outside that individual's production possibility frontier.

Quizplus · Accepted Answer

Since Hank is equally productive in both goods, the opportunity cost of producing one unit of fish or one unit of coconut for Hank is the same. Therefore, it doesn't matter which good he specializes in, as he can trade with Tom to get the good he isn't producing. Nonetheless, specialization would still allow for increased production and consumption possibilities for both individuals.

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