Does tom have comparative advantage in producing products

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Reference no: EM13921977

Two men, Tom Hanks and Forest Gump, have been marooned separately on the same deserted island. There are two activities each man can undertake to obtain food: fishing and gathering coconuts. Tom can catch 40 fish per hour or gather 10 coconuts per hour. Forest can catch 10 fish per hour or gather 8 coconuts per hour. Answer the following questions:

a. Does Tom have a comparative advantage in producing both products? Explain.

b. Tom and Forest have not yet met. Tom is working 2 hours a day and producing (and consuming) 48 fish and 8 coconuts (Note: the fish are very small). Forest is also working 2 hours a day, but he is producing and consuming 15 fish and 4 coconuts. Now assume that Tom and Forest meet and develop a trading relationship. Come up with a production and trading scheme such that they can each work the same amount per day as before, but each is better off than before. Provide specific numbers to show how they are better off.

Reference no: EM13921977

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