Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Suppose that you and your best friend produce apples and face masks
Suppose that you and your best friend produce apples and face masks. The table below shows what each of you can produce of these two goods. Item Apples Masks Production levels in units per week You 10 2 Your friend 20 3 5.1. Determine whether you or your friend have absolute advantage in the production of apples and the production of masks. 5.2. Determine whether you or your friend have comparative advantage in the production of apples and the production of masks. What is the opportunity cost of producing these goods for you and for your friend? 5.3. If you and your friend split your time equally to produce apples and masks and exchange between you too is not possible, how many units of each of these goods can you and your friend consume? 5.4. If you and your friend specialize in producing what each of you is best at, determine who will produce apples and who will produce masks. 5.5. What is the new consumption level of apples and masks for you and for your friend if trade is possible? What are the gains from trade? 5.6. What is the price of the goods that makes this trade beneficial for you and your friend? 5.7. What price (or price range) would be unacceptable to you? 5.8. What price (or price range) would be unacceptable to your friend?
here we can see my friend producing 20 apples per week and i could only produce 10 ao here he is more specialized in apples and in the case of masks he produce 3 per week and also i can produce 2 Here there is no big difference only 1 nos is more he produces than me so i think i am more adaptable in making masks
5.2) f i have more advantage in producing masks and my friend have more advantage in producing apples
For me the opportunity cost of 1 apple is 0.2 masks and the opportunity cost for making 1 mask is 5 apples
In my friends case the opportunity cost for producing 1 apple is 0.15 masks and the opportunity cost of producing 1 mask is 6.6 apples
So, its better to focus me on producing masks and my friend should focus in apples
5.3) If i am concentrated in producing apples i could produce 20 apple a week and if i concentrated i mask i can produce 4 masks
In my friend's case if he concentrate in making apples he could produce 40 apples per week and in the case of mask he could produce 6 per week
5.4) In the economic view i should concentrate i producing more masks than apple and my friend should concentrate in producing apples
5.5) as i said previously i should concentrate in producing masks so it will be 2 to 4 and my friend should produce more apples and it will be 20 to 40
Through trading the products me and my friend could increase the production of our commodity by buying more machineries or acquiring more human capital
5.6)
