Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 3.2, Problem 2QQ
To determine
Crusoe’s absolute and
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Alice can collect 10 coconuts or catch 1 fish per hour. Hs friend Emma can gather 30 coconuts or catch 2 fish per hour. What is alice opportunity cost of catching 1 fish? What is Emma's? Who has an absolute advantage in catching fish? Who has a comparative advantage in catching fish?
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Molly is Person A; John is person B
2 people from the same house do two things: they give rides and deliver meals
Molly can provide 4 taxi rides or 2 meal deliveries in an hour. John can provide 5 taxi rides or 4 meal deliveries in an hour.
Who has the absolute advantage in the provision of taxi rides? Who has the comparative advantage in the provision of taxi rides?
Absolute advantage: Person A Comparative advantage: Person A
Absolute advantage: Person B Comparative advantage: Person A
Absolute advantage: Person A Comparative advantage: Person B
Absolute advantage: Person B Comparative advantage: Person B
What is a price of taxi rides (in terms of meal deliveries) at which BOTH Molly and John will be better o" by specialization and trade?
• Robinson Crusoe can gather 10 coconuts or catch 1 fish per hour. His friend Friday can gather 30 coconuts or catch 2 fish per hour. What is Crusoe's opportunity cost of catching one fish? What is Friday's? Who has an absolute advantage in catching fish? Who has a comparative advantage in catching fish?
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Brief Principles of Macroeconomics (MindTap Course List)
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- Suppose there are two bakers in town: Sarah and Amy. Sarah can bake 4 loaves of bread or 8 pies in one day. Amy can bake 6 loaves of bread or 2 pies in one day. Please do the following: (a) Calculate the opportunity cost for both Sarah and Amy for baking pies and bread (b) Draw both Sarah and Amy's PPF curve (c) Who has an absolute advantage in baking bread? In baking pies? (d) Who has a comparative advantage in baking bread? In baking pies? (e) Determine a specific trade (i.e. give me numbers) that would make both Sarah and Amy better off.arrow_forwardGiven Ted can wax 4 cars per day or wash 2 cars per day and Tom can wax 3 cars per day or wash 1 car per day. What is each man’s opportunity cost of waxing a car? Who has an absolute advantage of waxing cars? Who has a comparative advantage of waxing cars?arrow_forwardTina can allocate her 8-hour day between baking and cooking. Each hour devoted to baking yields 2 cakes whereas each hour spent cooking produces 4 plates of food. Tina's neighbor, Ingrid, can produce 3 cakes or 4 plates of food per hour. Who has the absolute advantage in the production of cakes? Who has absolute advantage in the production of food? Who has a comparative advantage in the production of cakes? Who has a comparative advantage in the production of food? What is the opportunity cost for food?arrow_forward
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