Envelopes (per hour) 200 160 Deb's PPF 120 Pete's PPF 80 40 40 80 120 160 200 Packets (per hour) Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes. Which of the following statements is correct? Deb has an absolute advantage in both assembling packets and stuffing A) envelopes. B) Deb has a comparative advantage in stuffing envelopes. Deb has a comparative advantage in both assembling packets and stuffing envelopes. Pete has an absolute advantage in both assembling packets and stuffing D) envelopes.

Jill and Jack both have two pails that can be used to carry water down from a hill. Each makes only one trip down the hill, and each pail of water can be sold for $5. Carrying the pails of water down requires considerable effort. Both Jill and Jack would be willing to pay $4 each to avoid carrying one pail down the hill, and an additional $4 to avoid carrying a second pail down the hill. a. If Jack and Jill each must decide whether to carry one or two pails of water down from the top of the hill, how many pails will each child choose to carry? 2 pail(s) b. Jill and Jack's parents are worried that the two children don't cooperate enough with one another. Suppose they make Jill and Jack share equally their revenues from selling the water. Given that both are self-interested, construct the payoff matrix for the decisions Jill and Jack face regarding the number of pails of water each should carry. Instructions: In the payoff matrix below, enter the payoffs for each child for each possible…

Two men, Robinson Crusoe and Friday, have been marooned separately on the same deserted island.  There are two activities each man can undertake to obtain food:  fishing and gathering coconuts.  Robinson Crusoe can catch 40 fish per hour or gather 10 coconuts per hour. Friday can catch 10 fish per hour or gather 8 coconuts per hour.  Answer the following questions: A. Who is more efficient in each activity?  Could either or both of them benefit from meeting and deciding to form a trading relationship?  Explain intuitively. B. Robinson and Friday have not yet met.  Robinson is working 2 hours a day and producing (and consuming) 48 fish and 8 coconuts (note:  the fish are very small).  Friday is also working 2 hours a day, but he is producing and consuming 15 fish and 4 coconuts.  Now assume that Robinson and Friday meet and develop a trading relationship.  Come up with a production and trading scheme such that they can each work the same amount per day as before, but each is better off…

Carmen and Dennis live on a desolate island.  They spend their days fishing or climbing trees to collect coconuts.  The following table shows how much of each activity Carmen and Dennis can produce for each hour of work.  They each can work up to 12 hours a day.   Fish per hour Coconuts per hour Carmen 40 8 Dennis 28 7   On a piece of paper, draw Carmen's PPF with fish on the horizontal (x) axis and coconuts on the vertical (y) axis.  Carment's PPF extends from Question Blank 1 of 9 to Question Blank 2 of 9. (Hint: your answer should be in the form of a point (x,y).) Question Blank 3 of 9    has an absolute advantage in the production of fish, and  Question Blank 4 of 9    has an absolute advantage in the production of coconuts. Carmen's opportunity cost of producing 1 coconut is Question Blank 5 of 9 fish, while Dennis' opportunity cost of producing 1 coconut is Question Blank 6 of 9 fish.  Because Carmen has a  Question Blank 7 of 9    opportunity cost of producing…