Question

Soalan 1/ Question 1 Value of Value of Total Value of market goods Value of home goods Total markethome oods goodS John (6hrs x(2hrs x $70 $10) $5) John Jane (7hrs x (1hrx $45 $60CA5Jane $10 Total$10 $115 Total $95 a. Siapakah yang mempunyai kelebihan mutlak dalam pasaran buruh? Siapakah yang mempunyai kelebihan mutlak dalam pengeluaran di rumah? Mengapa? Who has absolute advantage in the labour market? Who has absolute advantage in home production? Why? b. Bagaimanakah John dan Jane boleh meningkatkan jumlah output/pendapatan mereka dengan pengkhususan? Lengkapkan jadual di atas. How can John and Jane increase their total output/income? Fill in the above table. (5 markah /5 marks)

Answer 1

A) Market goods:

John charges per hour $10. so in 1 hour he earns $10

Jane charges $5 per hour. so value of market goods per hour for Jane is $5.

Now comparing both the values we see that value of goods John has, is more.

So John has absolute advantage in market goods

Home goods

John charges $5 per hour whereas Jane charges $10 per hour. So in this case Jane has absolute advantage in home goods

B) both John and Jane works for 8 hours.

If John spends 7 hours for market goods his income will be 7*10=70 and 1 hour in market goods 1*5=5 so total income will be $70+5=$75

Now if Jane spends 6 hours in market goods. Her income will be 6*5=$30 and 2 hours in home goods then 2*10=20. Total. Income=$30+20=$50.

In both the cases income has increased by $5.

So they both should just change the hours spent on goods.

Value Value Tstal $5 Jahn Jore 2- s a