Geppetto and Lewis decide that they would like to trade puzzles and puppets in order to better stock their toy store shelves. The table below compares their production possibilities schedules.

Production Possibilities Schedules
Geppetto		Lewis
Puzzles	Puppets	Puzzles	Puppets
100	0	50	0
80	4	40	5
60	8	30	10
40	12	20	15
20	16	10	20
0	20	0	25

(a) Geppetto and Lewis agree to trade at a rate of 3 puzzles for each puppet. With those terms of trade, is most likely to be the supplier of puzzles and is most likely to be the supplier of puppets.

(b) The two toy store owners agree to specialize and to trade 30 puzzles for 10 puppets. The terms of trade are still 3 puzzles for each puppet. After they complete their trade, Geppetto will have puzzles and puppets and Lewis will have puzzles and puppets.

Answer rating: 100% (QA)

Graph 11 shows about the Production Possibility Schedule of both ... View the full answer