What are the gains from trade

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The following data represents the production possibilities of two people in solving math and economic problems. If they devote their total effort and time to math, A can solve 10 math problems and B can solve 10 math problems. If they devote their total efforts and time to economics, A can solve 10 economic problems and B 5 economic problems. Percent of Resources Devoted to: A B A. Who has the absolute advantage? A B. Who has the comparative advantage? B C. Assume that each will be self-sufficient and devoted half of their resources to math and half to economics. The outcome follows A A B B Alone- no trade Math Economics Math Economics 5 5 5 2.5 Now assume that they specialize according to comparative advantage. How much math and how economics will they produce together? What are the gains from trade?

Reference no: EM131167440

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