Now suppose a trading ship visits the island each day and offers to buy or sell food and clothing at the prices PF = 4, PC = 1. How, if at all, will the presence of this ship alter the production and consumption decisions of Crusoe and Friday?
Answer to relevant QuestionsGive three examples of activities accompanied by external costs or benefits. Suppose in Problem 11 the cost of RAM falls to $4 per gigabyte. How many gigabytes of memory should you purchase now? Suppose additionally that your benefit for an additional gigabyte of memory rises to $144 for the first ...How will your answers to Problems 9, 10, and 11 differ if Friday’s maximum production figures change to 20 units of food and 50 units of clothing?Consider a simple economy with two goods, food and clothing, and two consumers, A and B. For a given initial endowment, when the ratio of food to clothing prices in an economy is 3/1, A wants to buy 6 units of clothing while ...Lumber and sawdust are joint products, whose demand functions are DL and DS as shown in the diagram. The quantity axis measures the number of trees. Points on the demand schedules indicate demands for the lumber or sawdust ...
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