Answer to Question #291989 in Microeconomics for Ahtesham

Question

Your flatmate is a better cook than you are, but you

can clean more quickly than your flatmate can. If your

flatmate did all of the cooking and you did all of the

cleaning, would your chores take vou more or less

time than if you divided each task evenly? Give a simi-

lar example of how specialisation and trade can make

two countries both better off.

Answer 1

If I do the cleaning then I will take less time compared to dividing the roles evenly. This can be compared to two countries in which each is more better on a certain good compared to the other. Specialization of the countries on what they produce best increases the trade. They are able to produce what they produce with less time but what they do not have efficiency. They produce what best they can and buy what they cannot produce from the other countries and with cheaper prices.