Question

Without trade, arturo produced and consumed 240 tacos and 120 burritos and dina produced and consumed 100 tacos and 150 burritos. then, each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 260 tacos for 156 burritos. as a result, arturo gained

a. 20 tacos and 24 burritos and dina gained 40 tacos and 6 burritos.


b. 20 tacos and 36 burritos

Answer 1

The correct answer is A

Step-by-step explanation:

Gain from trade for person A(Arturo) is as:

Before trade,

Person A consume 120 burritos and 240 tacos

After trade

Person A will consume 156 burritos and 260 tacos

So, after trade

Person A produce 0 tacos and consume 260 tacos, then the gain will be 20 tacos (260 - 240).

After trade, person A consume 156 burritos and produce 300 burritos (this value taken from graph), so gain will be 24 burritos (300 - 156- 120).

Therefore, Person A gain will be 20 tacos and 24 burritos.

Gain from trade for Person D(Dina) is as:

Before trade,

Person D consume 150 burritos and 100 tacos

After trade

Person D will consume 156 burritos and 260 tacos

So, after trade,

Person D produce 400 tacos (this value taken from graph) and consume 260 tacos after trade and before trade 100 tacos, then gain will be 40 tacos (400- 260- 100)

After trade, person D produce 0 burritos and consume 156 burritos, the gain will be 6 burritos (156 - 150).

Therefore, person D gain will be 6 burritos and 6 tacos.

Note: Graph is missing in the question.