Suppose Mike and Johnson produce two productshamburgers and T-shirts. Mike produces 10 hamburgers or 3 T-shirts a
Question:
Suppose Mike and Johnson produce two products—hamburgers and T-shirts.
Mike produces 10 hamburgers or 3 T-shirts a day, and Johnson produces 7 hamburgers or 4 T-shirts. Assuming they can devote time to making either hamburgers or T-shirts.
a. Draw the production possibility curve.
b. Who enjoys the absolute advantage of producing both?
c. Who has a higher opportunity cost of making T-shirts?
d. Who has a comparative advantage in producing hamburgers?
Step by Step Answer:
Related Book For
International Economics Theory And Policy
ISBN: 9781292409719
12th Edition
Authors: Paul Krugman , Maurice Obstfeld, Marc Melitz
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