Salads (per hour) 30 Salads (per hour) 30+ 25+ 20 25 20 15 "으 15 10+ 10- 5+ 5 Lis PPF Joe's PPF 0 5 10 15 20 25 30 Smoothies (per hour) 0 5 10 15 20 25 30 Smoothies (per hour) (b) Joe's gains from trade (a) Liz's gains from trade The figure above shows the production possibilities frontiers (PPFs) for Liz and Joe. If they decide to trade salads for smoothies: O Liz should specialize in salads and Joe should specialize in smoothies. O Liz should specialize in smoothies and Joe should specialize in salads. O Liz should specialize in producing both since she has the same opportunity cost for each. O Joe should find another trading partner because he would have to sell fewer smoothies.

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
Problem 4PA
Question
Salads (per hour)
30
Salads (per hour)
30+
25+
20
25
20
15
"으
15
10+
10-
5+
5
Lis
PPF
Joe's
PPF
0
5
10
15 20 25 30
Smoothies (per hour)
0
5 10 15
20 25 30
Smoothies (per hour)
(b) Joe's gains from trade
(a) Liz's gains from trade
The figure above shows the production possibilities frontiers (PPFs) for Liz and Joe. If they
decide to trade salads for smoothies:
O Liz should specialize in salads and Joe should specialize in smoothies.
O Liz should specialize in smoothies and Joe should specialize in salads.
O Liz should specialize in producing both since she has the same opportunity cost for each.
O Joe should find another trading partner because he would have to sell fewer smoothies.
Transcribed Image Text:Salads (per hour) 30 Salads (per hour) 30+ 25+ 20 25 20 15 "으 15 10+ 10- 5+ 5 Lis PPF Joe's PPF 0 5 10 15 20 25 30 Smoothies (per hour) 0 5 10 15 20 25 30 Smoothies (per hour) (b) Joe's gains from trade (a) Liz's gains from trade The figure above shows the production possibilities frontiers (PPFs) for Liz and Joe. If they decide to trade salads for smoothies: O Liz should specialize in salads and Joe should specialize in smoothies. O Liz should specialize in smoothies and Joe should specialize in salads. O Liz should specialize in producing both since she has the same opportunity cost for each. O Joe should find another trading partner because he would have to sell fewer smoothies.
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