per ounce of meat). gain, but it must be somewhere between 2 and 4. ues to The pr 3- To see why the price has to be in this range, consider what would happen if it AC were not. If the price of meat were below 2 ounces of potatoes, both Frank and Rose would want to buy meat, because the price would be below each of their opportunity costs. Similarly, if the price of meat were above 4 ounces of potatoes, fror both would want to sell meat, because the price would be above their opportunity prir costs. But there are only two members of this economy. They cannot both be buyers ples of meat, nor can they both be sellers. Someone has to take the other side of the deal A mutually advantageous trade can be struck at a price between 2 and 4. In this price range, Rose wants to sell meat to buy potatoes, and Frank wants to sell pota- toes to buy meat. Each party can buy a good at a price that is lower than his or her opportunity cost. In the end, each person specializes in the good for which he or she has a comparative advantage and is, as a result, better off. The 3-3 Tom ente that phy law Quick Quiz 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 1 fish? What is Friday's? Who has an absolute advantage in catching fisn! Who has a comparative advantage in catching fish? this para sam Copyri Editonial n All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, , some third party content may be suppressed from the eBook and/or eChapter(s). uppressed content does not materially affect the overall learning experience. Cengage Learing reserves the right to remove additional content at any time if subsequent rights restrictions require it
per ounce of meat). gain, but it must be somewhere between 2 and 4. ues to The pr 3- To see why the price has to be in this range, consider what would happen if it AC were not. If the price of meat were below 2 ounces of potatoes, both Frank and Rose would want to buy meat, because the price would be below each of their opportunity costs. Similarly, if the price of meat were above 4 ounces of potatoes, fror both would want to sell meat, because the price would be above their opportunity prir costs. But there are only two members of this economy. They cannot both be buyers ples of meat, nor can they both be sellers. Someone has to take the other side of the deal A mutually advantageous trade can be struck at a price between 2 and 4. In this price range, Rose wants to sell meat to buy potatoes, and Frank wants to sell pota- toes to buy meat. Each party can buy a good at a price that is lower than his or her opportunity cost. In the end, each person specializes in the good for which he or she has a comparative advantage and is, as a result, better off. The 3-3 Tom ente that phy law Quick Quiz 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 1 fish? What is Friday's? Who has an absolute advantage in catching fisn! Who has a comparative advantage in catching fish? this para sam Copyri Editonial n All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, , some third party content may be suppressed from the eBook and/or eChapter(s). uppressed content does not materially affect the overall learning experience. Cengage Learing reserves the right to remove additional content at any time if subsequent rights restrictions require it
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:per ounce of meat).
gain, but it must be somewhere between 2 and 4.
ues to
The pr
3-
To see why the price has to be in this range, consider what would happen if it
AC
were not. If the price of meat were below 2 ounces of potatoes, both Frank and
Rose would want to buy meat, because the price would be below each of their
opportunity costs. Similarly, if the price of meat were above 4 ounces of potatoes, fror
both would want to sell meat, because the price would be above their opportunity prir
costs. But there are only two members of this economy. They cannot both be buyers ples
of meat, nor can they both be sellers. Someone has to take the other side of the deal
A mutually advantageous trade can be struck at a price between 2 and 4. In this
price range, Rose wants to sell meat to buy potatoes, and Frank wants to sell pota-
toes to buy meat. Each party can buy a good at a price that is lower than his or her
opportunity cost. In the end, each person specializes in the good for which he or
she has a comparative advantage and is, as a result, better off.
The
3-3
Tom
ente
that
phy
law
Quick Quiz 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 1 fish? What is Friday's? Who has an absolute advantage in catching fisn!
Who has a comparative advantage in catching fish?
this
para
sam
Copyri
Editonial n
All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights,
, some third party content may be suppressed from the eBook and/or eChapter(s).
uppressed content does not materially affect the overall learning experience. Cengage Learing reserves the right to remove additional content at any time if subsequent rights restrictions require it
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