Two persons, Abigail and Noah, each allocate their time between market work and housework. Abigail earns $12 per hour in the labor market, and can produce $18 worth of goods and services per hour at home. Noah earns $10 per hour in the market and can produce $5 worth of goods and services per hour at home.
a. Draw their separate production possibilities frontiers, labeling intercepts and slope. Who has the comparative advantage at home production? At market work?
b. Now suppose that Abigail and Noah get married and combine forces. Draw their joint production possibilities frontier. Label who is working at home and in the market (specifying full or part time) for each segment of the line. Label the point of full specialization.