Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can also catch more fish per hour than can Maryann. Therefore:
A)There are no gains to specialization and trade for Ginger.
B)There are no gains to specialization and trade for Maryann.
C)Maryann should specialize in the activity for which she has a comparative advantage.
D)Ginger should specialize in the activity for which she has an absolute advantage.

Question

Quizplus · Accepted Answer

Maryann should specialize in the activity for which she has a comparative advantage. This means that even though Ginger may be more productive in both gathering mangoes and catching fish, Maryann should focus on the activity for which she is relatively better at. By doing so, she can produce more of that activity compared to the other, and in turn, trade with Ginger for the other activity. This will increase both their overall productivity and welfare. Therefore, there are gains to specialization and trade for both Ginger and Maryann.

Ginger and Maryann Are Lost in the Jungle, Where the Only