calvin and hobbes run a company that sells only two items: t - shirts and car decals. calvin is fast at…

calvin and hobbes run a company that sells only two items: t - shirts and car decals. calvin is fast at making decals and very slow at making t - shirts, whereas hobbes is fast at making t - shirts and very slow at making decals. which statements accurately describe the situation? accurately describes the situation drag appropriate answer(s) here calvin has a comparative advantage for making decals. company output will be maximized if calvin makes all the decals and hobbes makes all the t - shirts. company output will be maximized if calvin and hobbes divide their time equally between making decals and making t - shirts. hobbes has a higher opportunity cost for making decals than calvin. drag appropriate answer(s) here does not accurately describe the situation

calvin and hobbes run a company that sells only two items: t - shirts and car decals. calvin is fast at making decals and very slow at making t - shirts, whereas hobbes is fast at making t - shirts and very slow at making decals. which statements accurately describe the situation? accurately describes the situation drag appropriate answer(s) here calvin has a comparative advantage for making decals. company output will be maximized if calvin makes all the decals and hobbes makes all the t - shirts. company output will be maximized if calvin and hobbes divide their time equally between making decals and making t - shirts. hobbes has a higher opportunity cost for making decals than calvin. drag appropriate answer(s) here does not accurately describe the situation

Answer

Brief Explanations:

Comparative advantage is when a person can produce a good at a lower opportunity - cost. Since Calvin is fast at making decals and Hobbes is fast at making T - shirts, Calvin has a comparative advantage in making decals and Hobbes in making T - shirts. Company output is maximized when each person specializes in the good they have a comparative advantage in. Also, since Hobbes is slow at making decals, his opportunity cost for making decals (the amount of T - shirts he gives up) is higher than Calvin's. Dividing time equally between the two goods is not the optimal way to maximize output.

Answer:

Accurately Describes the Situation:

  • Calvin has a comparative advantage for making decals.
  • Company output will be maximized if Calvin makes all the decals and Hobbes makes all the T - shirts.
  • Hobbes has a higher opportunity cost for making decals than Calvin. Does Not Accurately Describe the Situation:
  • Company output will be maximized if Calvin and Hobbes divide their time equally between making decals and making T - shirts.