In one hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets a Calculate Sues opportunity cost of producing a cap b Calculate Tessas opportunity cost of producing a cap c Who has a comparative advantage in producing caps d If Sue and Tessa specialize in producing the...

a Sue forgoes 4 jackets to produce 40 caps so Sues opportunity cost of producing ...

In one hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps

Question:

In one hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets.
a. Calculate Sue’s of producing a cap.
b. Calculate Tessa’s of producing a cap.
c. Who has a comparative advantage in producing caps?
d. If Sue and Tessa specialize in producing the good in which each of them has a comparative advantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade? Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...