Figure 3-16
Hosne's Production Possibilities Frontier
Merve's Production Possibilities Frontier
-Refer to Figure 3-16.Hosne should specialize in the production of
A)purses.
B)wallets.
C)both goods.
D)neither good.

Question

Figure 3-16
Hosne's Production Possibilities Frontier
Merve's Production Possibilities Frontier  
-Refer to Figure 3-16.Hosne should specialize in the production of
A)purses. 
B)wallets. 
C)both goods. 
D)neither good.

Quizplus · Accepted Answer

According to Hosne's production possibilities frontier, she has a comparative advantage in producing purses since her opportunity cost of producing one purse is lower than Merve's opportunity cost of producing one purse. Therefore, Hosne should specialize in producing purses and trade with Merve to obtain wallets.

Figure 3-16 Hosne's Production Possibilities Frontier