Assume Cliff and Paul were both producing wheat and corn, and each person was dividing his time equally between the two. Then each decides to specialize in the product in which he has a comparative advantage. Furthermore, they agree to trade 3 bushels of wheat for 3 bushels of corn. As a result of these new arrangements, Cliff is able to consume

To answer this question, let's start by understanding the concept of comparative advantage. Comparative advantage refers to the ability of one individual, country, or business to produce a certain good or service at a lower opportunity cost compared to others. In simpler terms, it means being relatively more efficient in producing a specific product.

Now, let's break down the scenario given. Initially, both Cliff and Paul were dividing their time equally between producing wheat and corn. This implies that they were producing both commodities at the same rate and had no specialization.

However, after realizing their comparative advantages, they decide to specialize in their respective areas of expertise. Let's assume that Cliff is better at producing wheat, and Paul is better at producing corn. This means that their opportunity costs of producing one product over the other are lower compared to each other.

Now, they enter into a trade agreement where they agree to exchange 3 bushels of wheat for 3 bushels of corn. Since Cliff is more efficient in producing wheat, he can produce more wheat in the same amount of time it takes Paul to produce 3 bushels of corn. Let's say Cliff can produce 6 bushels of wheat in the time it takes Paul to produce 3 bushels of corn.

As a result of this specialization and trade, Cliff can consume more than before. He can keep 3 bushels of wheat for himself (instead of dividing his time equally between wheat and corn) and trade the other 3 bushels of wheat for Paul's 3 bushels of corn. Now, Cliff has 3 bushels of wheat and 3 bushels of corn, which is more than what he had when he was dividing his time equally.

On the other hand, Paul can also consume more than before. He can keep 3 bushels of corn for himself (instead of dividing his time equally) and trade the other 3 bushels of corn for Cliff's 3 bushels of wheat. Now, Paul has 3 bushels of corn and 3 bushels of wheat, which is more than what he had when he was producing both commodities equally.

Therefore, both Cliff and Paul are better off with the specialization and trade arrangement because it allows them to consume more than when they were producing both commodities equally.