3. Remember the eight sailors? They set sail again on the S.S. Gold and get shipwrecked again. The good news is they're pretty good at island survival at this point - there are two main tasks: catching fish and gathering coconuts. Each sailor is able to gather 20 coconuts if they spend a day on that task OR catch 10 fish if they spend a day on that task. a. Draw a production frontier for the S.S. Gold sailors (remember there are 8 of them). Put fish on the x-axis and coconuts on the y-axis. Clearly indicate the point that corresponds to half the sailors catching fish and the other half gathering coconuts. Another ship, the S.S. Anne, wrecks on the neighboring island! Unlucky. There are ten sailors over there, but this is their first time being stranded so they're quite a bit worse at things. Half of the sailors are allocated to each task, and each day they end up with 30 fish and 20 coconuts. b. Draw a production frontier for the S.S. Anne sailors on the same graph as your answer for (a). Clearly indicate the point that corresponds to this current production level and clearly label the intercept on each axis. Captain Gold and Captain Anne try to negotiate a trade deal. Assume each group will specialize in the task in which they have comparative advantage: coconuts for Gold and fish for Anne. c. Captain Gold offers to trade one coconut for two fish. Would Anne accept this deal? Explain why or why not. What is the most fish Anne would give for one coconut?
3. Remember the eight sailors? They set sail again on the S.S. Gold and get shipwrecked again. The good news is they're pretty good at island survival at this point - there are two main tasks: catching fish and gathering coconuts. Each sailor is able to gather 20 coconuts if they spend a day on that task OR catch 10 fish if they spend a day on that task. a. Draw a production frontier for the S.S. Gold sailors (remember there are 8 of them). Put fish on the x-axis and coconuts on the y-axis. Clearly indicate the point that corresponds to half the sailors catching fish and the other half gathering coconuts. Another ship, the S.S. Anne, wrecks on the neighboring island! Unlucky. There are ten sailors over there, but this is their first time being stranded so they're quite a bit worse at things. Half of the sailors are allocated to each task, and each day they end up with 30 fish and 20 coconuts. b. Draw a production frontier for the S.S. Anne sailors on the same graph as your answer for (a). Clearly indicate the point that corresponds to this current production level and clearly label the intercept on each axis. Captain Gold and Captain Anne try to negotiate a trade deal. Assume each group will specialize in the task in which they have comparative advantage: coconuts for Gold and fish for Anne. c. Captain Gold offers to trade one coconut for two fish. Would Anne accept this deal? Explain why or why not. What is the most fish Anne would give for one coconut?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Captain Anne rejects Captain Gold's initial proposal and counters with another offer.
d. Captain Anne offers to trade a fish for three coconuts. Would Gold accept this deal?
Explain why or why not. What is the most coconuts Gold would give for one fish?
Each ship's sailors gets fed up with their respective captain's unwillingness to cooperate and
they stage a mutiny. Afterwards, they decide to trade at a price of 1 coconut per fish.
e.
Draw a new set of production frontiers on the graph from (a) that reflect this trade
deal. Explain how both groups can have more fish and more coconuts than before.
Transcribed Image Text:3. Remember the eight sailors? They set sail again on the S.S. Gold and get shipwrecked again.
The good news is they're pretty good at island survival at this point - there are two main
tasks: catching fish and gathering coconuts. Each sailor is able to gather 20 coconuts if they
spend a day on that task OR catch 10 fish if they spend a day on that task.
a. Draw a production frontier for the S.S. Gold sailors (remember there are 8 of them).
Put fish on the x-axis and coconuts on the y-axis. Clearly indicate the point that
corresponds to half the sailors catching fish and the other half gathering coconuts.
Another ship, the S.S. Anne, wrecks on the neighboring island! Unlucky. There are ten sailors
over there, but this is their first time being stranded so they're quite a bit worse at things. Half
of the sailors are allocated to each task, and each day they end up with 30 fish and 20 coconuts.
b. Draw a production frontier for the S.S. Anne sailors on the same graph as your
answer for (a). Clearly indicate the point that corresponds to this current production
level and clearly label the intercept on each axis.
Captain Gold and Captain Anne try to negotiate a trade deal. Assume each group will specialize
in the task in which they have comparative advantage: coconuts for Gold and fish for Anne.
c. Captain Gold offers to trade one coconut for two fish. Would Anne accept this deal?
Explain why or why not. What is the most fish Anne would give for one coconut?
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Step 1: Define comparative advantage
VIEWStep 2: Draw the production frontier for SS Gold sailors
VIEWStep 3: Draw the production frontier for SS Anne sailors
VIEWStep 4: State weather SS Gold will accept the terms by SS Anne
VIEWStep 5: State weather SS Gold will accept the terms by SS Anne
VIEWStep 6: Explain 1 coconut=1 fish condition
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