Kristen and Anna live in the beach town of Santa Monica. They own a small business in which they make wristbands and pot holders and sell them to people on the beach. As shown in the table on the following page, Kristen can make 15 wristbands per hour but only 3 pot holders. Anna is a bit slower and can make only 12 wristbands or 2 pot holders in an hour.

a. For Kristen and for Anna, what is the opportunity cost of a pot holder? Who has a comparative advantage in the production of pot holders? Explain your answer.

b. Who has a comparative advantage in the production of wristbands? Explain your answer.

Transcribed Image Text:

Output per hour Wristbands Pot holders Kristen 15 Anna 12 12 Output per hour Wristbands Pot holders Kristen 15 Anna 12 12

Answer rating: 100% (QA)

For Kristen the possible value of a potholder 153 five wristbands and for anna the opportunity price of a potholder 122 6 wristbands Kristen and anna ... View the full answer