Question

Suppose there are only two goods produced in an economy: phones and meals. Maria is adept at assembling electronics but has poor skills at preparing food. Mike is an accomplished chef but is not very skilled at assembling electronics.

Currently Mike and Maria each work independently, and they each produce both meals and phones. However, they are considering trading some of their respective output with each other, but only if that would allow each person to become more propserous.
Which statement is not true?
O Mike should produce more food and fewer phones, and Maria should produce more phones and fewer meals.
O Customers will gain if Mike and Maria decide to specialize in what they do best and trade their output.
O Mike and Maria would gain by using their time making only the one good that they are best at producing.
O Mike and Maria will both gain only if they trade the same number of phones for the same number of meals.

Answer 1

The incorrect statement is that Mike and Maria must trade equal numbers of phones and meals to benefit. They should specialize in the production of goods where they have a comparative advantage, and then trade to improve both of their consumption possibilities.

Step-by-step explanation:

The statement that is not true is that Mike and Maria will both gain only if they trade the same number of phones for the same number of meals. This is based on understanding the principle of comparative advantage and specialization. While Mike should indeed produce more food and fewer phones, and Maria should produce more phones and fewer meals, the key to their gain from trade is that each specializes in producing the good for which they have a comparative advantage. By doing so, both can increase their total output, and through trade, they can improve their consumption possibilities.

Division of labor increases productivity by allowing workers to focus on tasks that make the best use of their abilities and skills. In the case of specialized workers like a baker and a chef, if each specializes in their best task, the kitchen can produce more meals efficiently because each worker's productivity is maximized. This principle extends to economies at the macro level, where countries specialize in producing goods for which they have a comparative advantage and engage in international trade, thereby increasing overall welfare.

Answer 2

This statment is not true: O Mike and Maria will both gain only if they trade the same number of phones for the same number of meals.

Step-by-step explanation:

Mike and Maria agreed to trade part of their results only if that option brought prosperity for both. So we must consider that exchanging the same number of phones and meals would not bring a balance of gain to both, since the financial value of a cell phone is much higher than that of a meal, so Maria would lose.

Compared to the other statements, all are true, because specialization in what they do best would provide added benefits to customers and producers, who would find ways to produce the good more effectively and streamlined processes.