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In one day Cindy can either build 1 computer or 2 stereos, and in one day Dana can build either 2 computers or 3 stereos. Of course, Cindy or Dana could split their time between the two activities and produce some combination of the two products.

Suppose Cindy and Dana each specialize in the production of the good for which she has the comparative advantage, and they agree to trade at a price of 1 stereo for 1 computer.

Is both of them will gain from this trade? Why can somebody explain

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91801593
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