Suppose that Giorgia finds a new way to cook pasta that enables her to make 30 platters
Question:
Suppose that Giorgia finds a new way to cook pasta that enables her to make 30 platters an hour. (She can still make only 8 cups of pesto sauce an hour.)
a. Who now has a comparative advantage in producing pasta?
b. Can Marco and Giorgia still gain from trade?
c. Would Marco and Giorgia still be willing to trade 11 platters of pasta for 4 cups of pesto sauce? Explain your answer.
In an hour, Marco can produce 5 cups of pesto sauce or 15 platters of pasta and Giorgia can produce 8 cups of pesto sauce or 20 platters of pasta.
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Step by Step Answer:
The key to your question is comparing the opportunity costs for each option for both Giorgia and Marco Opportunity cost is the cost of forgoing the ne...View the full answer
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