Answer:
100
Explanation:
If Arturo and Dina switch from each person dividing their time equally between the production of tacos and burritos to each person spending all of their time producing the good in which they have a comparative advantage, then total production of burritos will increase by:
Now we can see from the graph that Arturo can make 300 burritos and 400 tacos and Dina can make 200 burritos and 400 tacos.
Total current burritos = 300 + 200 = 500
Given that each person is currently dividing their time equally between the production of tacos and burritos
It reveals that Arturo has a comparative advantage in production of Burritos because he produces more that Dina with the available resources of time.
Hence if they are to switch to each person spending all of their time producing the good in which they have a comparative advantage, then total production of burritos will increase by: 100 because Arturo will produce 600 burritos with the other half of his time he has been spending on making tacos
Answer:
50
Explanation:
Arturo's production possibilities frontier is 300 burritos and 400 tacos. Dina's production possibilities frontier is 200 burritos and 400 tacos.
Lets assume that they each work 10 hours a day (it is easier to divide using 10), so their current production schedule is as follows:
max. burritos p/hour max. tacos p/hour 5 hour Px
burritos tacos
Arturo 300 30 400 40 150 200
Dina 200 20 400 40 100 200
total production 250 400
Arturo's opportunity cost of producing burritos instead of tacos = 400 / 300 = 1.33 tacos per burrito
Arturo's opportunity cost of producing tacos instead of burritos = 300 / 400 = 0.75 burritos per taco
Dina's opportunity cost of producing burritos instead of tacos = 400 / 200 = 2 tacos per burrito
Dina's opportunity cost of producing tacos instead of burritos = 200 / 400 = 0.5 burritos per taco
Since Arturo's opportunity cost of producing burritos is lower than Dina's, he has a comparative advantage in the production of burritos. Therefore, he will work all day producing burritos and his total production = 300 burritos, which is 50 more burritos than before.
