PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 2, Problem 2.3CC
To determine
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I am eight hour day Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight hour day Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
a)what is Andy's opportunity cost of producing one loaf of bread? What is rolfes opportunity cost of producing one loaf of bread
b) who has the comparative advantage in bread production? Who has comparative advantage in butter production?
c)would they both gain from specialization and trade in other each other? Show it through a numerical example
Tina 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?
Bob and Erik are both experienced in making pizzas and burgers. In one day, Bob can make 8 pizzas or 32 burgers. With the same effort and in the same day, Erik can make 12 pizzas or 36 burgers.
Who has the absolute advantage in making pizzas and who has the absolute advantage in making burgers?
Who has the comparative advantage in each activity? Show your derivations.
According to the principle of comparative advantage, in which activity should each
person (Bob and Erik) specialize in order to gain from trade?
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Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Chapter 2 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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- In Italian restaurant, Jack needs one hour and a half to prepare pizza and one hour to make lasagna. Pascal needs two hours to make a pizza and one hour and a half to make a lasagna. Which one has the comparative advantage in preparing pizza, in preparing lasagna. Explain your answer. Which one has the absolute advantage in preparing lasagna, in preparing Pizza. Explain your answer.arrow_forwardDebra can make either 12 cakes or 16 cookies in 4 hours.Sam can make either 6 cakes or 12 cookies in 4 hours. a) who has an absolute advantage at producing cakes and who has an absolute advantage at producing cookies? Briefly explain your answer. b) if Debra and Sam concentrate on producing only the product in which they have a comparative advantage, how many cakes and how many cookies will they produce? c) state debra's and Sam's opportunity costs of producing one cake and one cookie. Draw and place your answer in a table which looks something like this: Cake. Cookie Debra samarrow_forwardDuring the summer you have made the decision to attend summer school, which prevents you from working at your usual summer job in which you normally earn $6,000 for the summer. Your tuition cost is $3,000 and books and supplies cost $1,300. In terms of dollars, what is the opportunity cost of attending summer school? Show your calculation. What is comparative advantage? Give an example. Why does it make sense for economies to specialize according to comparative advantage and trade? What is the production possibilities frontier? What economic concepts are represented in the production possibilities model?arrow_forward
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