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Specialize in the production of the good

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Nettie can produce either 8 cupcakes or 4 hamburgers. Becky can produce either 4 cupcakes or 8 hamburgers. Suppose that Nettie and Becky each specialize in the production of the good for which they have a comparative advantage and decide to trade. The terms of trade are 1 cupcake for 1 hamburger. After trade, how many hamburgers will Nettie consume if Becky consumes 4 hamburgers? How many cupcakes will Becky consume if Nettie consumes 4 cupcakes?

  • Nettie consumes 0 hamburgers, Becky consumes 0 cupcakes
  • Nettie consumes 0 hamburgers, Becky consumes 4 cupcakes
  • Nettie consumes 4 hamburgers, Becky consumes 0 cupcakes
  • Nettie consumes 4 hamburgers, Becky consumes 4 cupcakes

Reference no: EM131348569

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