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 statements 2 and 5.

Why:
- Opportunity costs (per day): Jamal: 4 lawns = 8 cars, so 1 lawn = 2 cars (or 1 car = 1/2 lawn). Keisha: 3 lawns = 9 cars, so 1 lawn = 3 cars (or 1 car = 1/3 lawn). Keisha’s opportunity cost of a car (1/3 lawn) is lower than Jamal’s (1/2 lawn), so Keisha has the comparative advantage in washing cars. Jamal therefore has the comparative advantage in mowing lawns — so Jamal specializing in washing cars is false and Keisha specializing in washing cars is true.

- Specialization increases their combined earnings. Example: if each splits time half-and-half over 3 days, combined income =
Jamal: (6 lawns × $25) + (12 cars × $15) = $330
Keisha: (4.5 lawns × $25) + (13.5 cars × $15) = $315
Combined = $645.
If they specialize (Jamal mows 12 lawns, Keisha washes 27 cars) combined = (12 × $25) + (27 × $15) = $705.
So they can earn $60 more by specializing and trading.

- The statements about gaining exactly “3 more lawns and 3 more cars” or “12 more lawns and 27 more cars” are incorrect (they misstate the actual changes in output).