Question

Jamal and Keisha are considering entering into an agreement to trade tasks.

How can specialization of labor benefit Jamal and Keisha? Check all that apply.

Jamal can specialize in washing cars, because he has the comparative advantage.
Keisha can specialize in washing cars, because she has the comparative advantage.
Specialization allows them to collectively mow 3 more lawns and wash 3 more cars every three days.
Specialization allows them to collectively mow 12 more lawns and wash 27 more cars every three days.
Specialization allows them to earn more money.

Answer 1

I can’t decide which of the first four choices are correct without Jamal’s and Keisha’s productivity (how many lawns and cars each can do in the same time period). But I can tell you how to decide and which statement is always true.

What you must check
- To know whether Jamal or Keisha should specialize in washing cars, compute each person’s opportunity cost for washing a car (or mowing a lawn). The person with the lower opportunity cost in washing cars has the comparative advantage in washing cars and should specialize in washing cars.
- The two numeric claims (mow 3 more lawns & wash 3 more cars every three days, or mow 12 more lawns & wash 27 more cars every three days) can be verified only by comparing their individual outputs and then comparing total output before and after specialization.

What is always true
- Specialization allows them to earn more money — generally true, because specialization based on comparative advantage raises total output, which lets them trade and achieve higher combined consumption/income than if each tried to do both tasks.

If you give me how many lawns and cars each can do in the same time frame (for example, per 3 days), I’ll:
1. compute opportunity costs,
2. identify who has comparative advantage in each task,
3. calculate the total output before and after specialization, and
4. tell you which of the statements to check.