Use the table below to choose the correct answer. The table outlines the production possibilities of Robinson Crusoe and Joe Friday.

If Crusoe and Friday want to maximize their consumption possibilities,
A) Crusoe should specialize in producing good X and Friday in producing good Y, but no trade should be allowed.
B) Crusoe should specialize in producing good X and Friday in producing good Y; trade should occur to maximize joint consumption.
C) Crusoe should specialize in producing good Y and Friday in producing good X; trade should occur to maximize joint consumption.
D) both individuals should strive for self-sufficiency, which always maximizes output.

Question

Use the table below to choose the correct answer. The table outlines the production possibilities of Robinson Crusoe and Joe Friday.

If Crusoe and Friday want to maximize their consumption possibilities,
A) Crusoe should specialize in producing good X and Friday in producing good Y, but no trade should be allowed. 
B) Crusoe should specialize in producing good X and Friday in producing good Y; trade should occur to maximize joint consumption. 
C) Crusoe should specialize in producing good Y and Friday in producing good X; trade should occur to maximize joint consumption. 
D) both individuals should strive for self-sufficiency, which always maximizes output.

Quizplus · Accepted Answer

Crusoe has a comparative advantage in producing good X because he can produce more units of X compared to Y, while Friday has a comparative advantage in producing good Y because he can produce more units of Y compared to X. By specializing in their respective goods and trading with each other, they can increase their consumption possibilities beyond what they could produce on their own. This is the concept of Comparative Advantage, which is an important principle of international trade. Option A and C are incorrect because trade is beneficial for maximizing joint consumption, and option D is incorrect because self-sufficiency does not always maximize output.

Use the Table Below to Choose the Correct Answer