Question

Jamal and Keisha each earn money by washing cars and mowing lawns.

Jamal can mow 4 lawns or wash 8 cars in one day. Keisha can mow 3 lawns or wash 9 cars in one day. They both charge $25 for each lawn and $15 for each car.

The chart shows their production after 3 days.

A 3-column table has 2 rows. The first column has entries Lawns, cars. The second column is labeled Jamal with entries 12, 24. The third column is labeled Keisha with entries 9, 27.

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

Select:
- 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 earn more money.

Why:
- Opportunity costs: Jamal: 4 lawns = 8 cars so 1 lawn = 2 cars (1 car = 0.5 lawn) → Jamal has lower cost in mowing lawns. Keisha: 3 lawns = 9 cars so 1 lawn = 3 cars (1 car = 1/3 lawn) → Keisha has lower cost in washing cars. So Keisha has comparative advantage in cars; Jamal in lawns.
- If they currently do the opposite (Jamal washes cars → 24 cars, Keisha mows lawns → 9 lawns) they produce 24 cars and 9 lawns. If they specialize according to comparative advantage (Jamal mows → 12 lawns, Keisha washes → 27 cars) they produce 27 cars and 12 lawns — an increase of 3 cars and 3 lawns.
- Money: current (bad) arrangement revenue = Jamal 24×$15 + Keisha 9×$25 = $360 + $225 = $585. With specialization revenue = Jamal 12×$25 + Keisha 27×$15 = $300 + $405 = $705. They earn more with specialization.