Figure 3-3

-Refer to Figure 3-3.In order to maximize total output,
A)Ginger should specialize in tap shoes and Fred should specialize in ballet slippers.
B)Ginger should specialize in both goods and Fred should specialize in neither good.
C)Ginger should specialize in ballet slippers and Fred should specialize in tap shoes.
D)Ginger should specialize in neither good and Fred should specialize in both goods.

Question

Figure 3-3
 
-Refer to Figure 3-3.In order to maximize total output,
A)Ginger should specialize in tap shoes and Fred should specialize in ballet slippers. 
B)Ginger should specialize in both goods and Fred should specialize in neither good. 
C)Ginger should specialize in ballet slippers and Fred should specialize in tap shoes. 
D)Ginger should specialize in neither good and Fred should specialize in both goods.

Quizplus · Accepted Answer

According to the principle of comparative advantage, both individuals should specialize in producing the good that they have the lowest opportunity cost for. From the table, we can see that Ginger has a lower opportunity cost for producing ballet slippers (1/2 tap shoes) than for producing tap shoes (2 ballet slippers), while Fred has a lower opportunity cost for producing tap shoes (1/3 ballet slippers) than for producing ballet slippers (3 tap shoes). Therefore, Ginger should specialize in producing ballet slippers, and Fred should specialize in producing tap shoes, in order to maximize total output.

Figure 3-3 -Refer to Figure 3-3.In Order to Maximize Total Output