Scenario 1 Two Men Live Alone on an Isolated Island. to Survive

question 55

Essay

Scenario 1
Two men live alone on an isolated island. To survive they must undertake a few basic economic activities like water carrying, fishing, cooking and shelter construction and maintenance. The first man is young, strong, and educated. He is also faster, better, and more productive at everything. He has an absolute advantage in all activities. The second man is old, weak, and uneducated. He has an absolute disadvantage in all economic activities. In some activities the difference between the two is great; in others it is small.
-Based on Scenario 1 above critically evaluate the following statement. "Because of the productivity differential between the two men we can conclude that the young man has a comparative advantage in the production of everything over the older man.

---

Definitions:

Great Depression

A severe worldwide economic downturn that lasted from 1929 until the late 1930s, characterized by massive unemployment and deflation.

Government Policy

The deliberate action or inaction by a government or public authority to address public issues and promote welfare.

Aggregate Demand

The aggregate need for products and services in an economy at a specific price level during a certain time frame.

Aggregate Demand

The total demand for all goods and services within an economy at various price levels, during a specific time period.