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Bill and Hillary produce food and clothing. In an hour, Bill can produce 2 unit of food or 2 unit of clothing, while Hillary can produce 4 units of food

or 6 units of clothing. They each work 10 hours a day. a) Who has an absolute advantage in producing food? Who has an absolute advantage in producing clothing? Explain. b) Who has a comparative advantage in producing food? Who has a comparative advantage in producing clothing? Explain. c) Who should specialize in production of each product and why? d) What is the gain from trade if before specialization both persons spent 50 % of the time on food production and 50 % of time on clothes production?

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