Answer / Explanation
The question is incomplete as the options of answers were not given. Kindly kind the complete question with the answer options below.
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
The answer is 3, the total production of purses will increase by 3
Explanation:
To properly interpret this question, we will have to define some terms which includes:
Comparative Advantage: comparative advantage simply refers to a country economy or a country economic ability to produce goods and services at a cost lower or lower opportunity cost than its counter parts or other country trade partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.
If we refer back tot he question considering the effect of comparative advantage, the answer will be 3 out of the given options that complete the question.
