It Takes Barbara 3 Hours to Make a Pie and 4

question 155

True/False

It takes Barbara 3 hours to make a pie and 4 hours to make a shirt. It takes Gary 2 hours to make a pie and 5 hours to make a shirt. Barbara should specialize in making shirts and Gary should specialize in making pies, then they should trade.

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Definitions:

Allocate Resources

The process of assigning available assets, time, and effort to various tasks or purposes in order to achieve specific goals.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Private Goods

Goods that are excludable and rivalrous in consumption, meaning access can be limited and consumption by one individual prevents others from consuming the same good.

Public Goods

Goods that are non-excludable and non-rival in consumption, meaning they are available for everyone to consume regardless of who pays and one person's consumption does not reduce availability to others.