Smoothies Cell phones Martha 15 per day 3 per day Kelly 10 per day 1 per day This table shows the how many smoothies or cell phones Martha and Kelly can each produce if they put all of their respective resources into producing that good alone. Use this information to answer the following questions: Who has an absolute advantage in the production of smoothies? Who has an absolute advantage in the production of cell phones? What is Martha's opportunity cost of producing one smoothie (in terms of cell phones)? What is Kelly’s opportunity cost of producing one smoothie (in terms of cell phones)? What is Martha's opportunity cost of producing one cell phone (in terms of smoothies)? What is Kelly's opportunity cost of producing one cell phone (in terms of smoothies)? If each person specializes in the production of the product in which she has a comparative advantage, who should produce smoothies? If each person specializes in the production of the product in which she has a comparative advantage, who should produce cell phones?
Smoothies Cell phones Martha 15 per day 3 per day Kelly 10 per day 1 per day This table shows the how many smoothies or cell phones Martha and Kelly can each produce if they put all of their respective resources into producing that good alone. Use this information to answer the following questions: Who has an absolute advantage in the production of smoothies? Who has an absolute advantage in the production of cell phones? What is Martha's opportunity cost of producing one smoothie (in terms of cell phones)? What is Kelly’s opportunity cost of producing one smoothie (in terms of cell phones)? What is Martha's opportunity cost of producing one cell phone (in terms of smoothies)? What is Kelly's opportunity cost of producing one cell phone (in terms of smoothies)? If each person specializes in the production of the product in which she has a comparative advantage, who should produce smoothies? If each person specializes in the production of the product in which she has a comparative advantage, who should produce cell phones?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Smoothies
Cell phones
Martha
15 per day
3 per day
Kelly
10 per day
1 per day
This table shows the how many smoothies or cell phones Martha and Kelly can each produce if they put all of their respective resources into producing that good alone. Use this information to answer the following questions:
Who has an absolute advantage in the production of smoothies?
Who has an absolute advantage in the production of cell phones?
What is Martha's opportunity cost of producing one smoothie (in terms of cell phones)?
What is Kelly’s opportunity cost of producing one smoothie (in terms of cell phones)?
What is Martha's opportunity cost of producing one cell phone (in terms of smoothies)?
What is Kelly's opportunity cost of producing one cell phone (in terms of smoothies)?
If each person specializes in the production of the product in which she has a comparative advantage , who should produce smoothies?
If each person specializes in the production of the product in which she has a comparative advantage, who should produce cell phones?
Assume there are only two goods in the world: pizza and electric fans. Draw a production possibility frontier (PPF) illustrating the trade-off between the two (specific numbers are not needed – we are only looking for the basic shape of the PPF). On the same graph, draw new frontiers showing 1) what happens if a major plague reduced worldwide population significantly, and 2) if a machine is invented which doubles the number of fans that can be made in a day (but is irrelevant in the production of pizza).
You and your neighbor are the only people in a world that produces only berries and squash. You do not engage in trade with each other. On your own, you can each produce the following per day:
You
Neighbor
Berries
Squash
Berries
Squash
Only gather berries
24 pounds
0 pounds
8 pounds
0 pounds
Only gather squash
0 pounds
12 pounds
0 pounds
8 pounds
Right now you each split your time between gathering the two products. You currently gather and consume 16 pounds of berries and 4 pounds of squash, while your neighbor is gathering and consuming 6 pounds of berries and 2 pounds of squash. Show (both graphically and numerically) how specialization and then trade with each other can make both of you better off. Who specializes in the production of each product? After specialization, what is an example of a trade that would be beneficial for both of you to make?
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