Figure 3-5

-Refer to Figure 3-5.If Hosne and Merve switch from each person dividing her time equally between the production of purses and wallets to each person spending all of her time producing the good in which she has a comparative advantage,then total production of purses will increase by
A) 2.
B) 3.
C) 5.
D) 10.

Question

Figure 3-5
 
-Refer to Figure 3-5.If Hosne and Merve switch from each person dividing her time equally between the production of purses and wallets to each person spending all of her time producing the good in which she has a comparative advantage,then total production of purses will increase by
A) 2. 
B) 3. 
C) 5. 
D) 10.

Quizplus · Accepted Answer

From the production possibilities frontier in Figure 3-5, it is clear that Hosne has a comparative advantage in producing purses and Merve has a comparative advantage in producing wallets. If both of them specialize in their respective areas of comparative advantage, then Hosne will produce 4 purses (instead of 2) and Merve will produce 3 wallets (instead of 2). Therefore, the total production of purses will increase by 2 (from 2 to 4) and the total production of wallets will increase by 1 (from 2 to 3), resulting in a total increase of 3 in the combined production of both goods. Hence, the answer is B) 3.

Figure 3-5 -Refer to Figure 3-5.If Hosne and Merve Switch from Each