Attempts |:I:I:| Keep the Highest 5 5. Comparative Advantage The following table describes the production possibilities. of two cities in the country:r of Baseballia: Pairs of Red Socks per Worker per Hour Pairs of Ih'ln'hite Socks per Worker per Hour Boston 3 3 Chicago 2 1 Without trade, the price of a pair ofwhite socks (in terms of red socks) in Boston is T of red socks, and in Chicago it is T of red socks. V has an absolute advantage in the production of red socks, and V has an absolute advantage in the production of white socks. '7 has a comparative advantage in the production of red socks, and 'V' has a comparative advantage in the production of white socks. If the cities trade with each other, Boston will export '7 socks, and Chicago will export '7 socks. The price of Iwhite socks can be expressed in terms of red socks. The highest price at which white socks can be traded that would make both cities better oFF is '7 of red socks per pair of white socks, and the lowest price that makes both cities better off is '7 of red socks per pair of white socks. Opportunity Cost Hilary and Maria are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Hilary takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. Maria takes 6 hours to brew a gallon of root beer and 4 hours to make a pizza. Hilary's opportunity cost of brewing a gallon of root beer is and Maria's opportunity cost of brewing a gallon of root beer is V has an absolute advantage in brewing root beer, and has a comparative advantage in brewing root beer. If Hilary and Maria trade foods with each other, will trade away pizza in exchange for root beer. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza. Grade It Now Save & Continue Continue without saving