ECNS 202 PRINTOUT
8th Edition
ISBN: 9781337096584
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 3.2, Problem 2QQ
To determine
Crusoe’s absolute and comparative advantage .
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Molly is Person A; John is person B
2 people from the same house do two things: they give rides and deliver meals
Molly can provide 4 taxi rides or 2 meal deliveries in an hour. John can provide 5 taxi rides or 4 meal deliveries in an hour.
Who has the absolute advantage in the provision of taxi rides? Who has the comparative advantage in the provision of taxi rides?
Absolute advantage: Person A Comparative advantage: Person A
Absolute advantage: Person B Comparative advantage: Person A
Absolute advantage: Person A Comparative advantage: Person B
Absolute advantage: Person B Comparative advantage: Person B
What is a price of taxi rides (in terms of meal deliveries) at which BOTH Molly and John will be better o" by specialization and trade?
Alice can collect 10 coconuts or catch 1 fish per hour. Hs friend Emma can gather 30 coconuts or catch 2 fish per hour. What is alice opportunity cost of catching 1 fish? What is Emma's? Who has an absolute advantage in catching fish? Who has a comparative advantage in catching fish?
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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