Question

Consider the following scenario. Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to bake one loaf of bread and one hour to make one pie. Joey takes four hours to bake one loaf of bread and four hours to make one pie. If Rachel and Joey decide to specialize in order to maximize their combined output, who should produce what?A. Joey should specialize in making pies because he has an absolute advantage. B. Rachel should specialize in making pies and Joey should specialize in making bread.C. Joey should specialize in making pies and Rachel should specialize in making bread. D. Rachel should specialize in making bread and pies because she has a comparative advantage in both. E. Rachel should not specialize because she is better at producing both.

Answer 1

The correct option is B

Explanation:

3. b) Rachel in specialize in making pies and joey should specialize in making bread.

Rachel can make 1 pie in one hour so she is already taking less time to make a pie than to make a bread. thus,if she should specialize in making pie.while coming to joey, joey takes 4 hours to make either pie or bread so he left with only one option i.e, to be specialized to make bread only.so that they can maximize their oupu