Question 20 (1 point) It takes Melissa eight hours to produce a bushel of corn a

Question

Question 20 (1 point)

It takes Melissa eight hours to produce a bushel of corn and two hours to wash and polish a car. It takes Greg six hours to produce a bushel of corn and one hour to wash and polish a car. If Greg and Melissa each work 48 hours in one week and produce only the good for which they have the comparative advantage, how much corn is produced and how many cars are washed in total?

Question 20 options:

six bushels of corn and 48 washed cars

eight bushels of corn and 24 washed cars

eight bushels of corn and 48 washed cars

six bushels of corn and 24 washed cars

six bushels of corn and 48 washed cars

eight bushels of corn and 24 washed cars

eight bushels of corn and 48 washed cars

six bushels of corn and 24 washed cars

Explanation / Answer

Option A.

In this case, Melissa has comparative advantage in producing corns and Greg has comparative advantage in washing cars.

Corn Cars

M 6 bushels 24 cars

G 8 bushels 48 cars

In the above table, total time = 48 hours is divided by the time taken by each to produce a bushel of corn and wash car.

Opportunity cost of producing 6 bushels = 24 cars by melissa

So, 1 bushel = 4 cars

Similarlly, for Greg. the opportunity cost of producing 1 bushel = 6 cars. So, opportunity cost of producing corn is low in case of melissa. So, Melissa has comparative advantage in producing corn.

SImilarly, we can compute the reciprocal of above opportunity cost as opportunity cost of producing cars. So, Greg has comparative advantage in wasing cars.

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