Tom and Sam are a hand-crafty couple. They recently made a deal with a small nearby...

 

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Tom and Sam are a hand-crafty couple. They recently made a deal with a small nearby grocery store called Trading-With-Joe. Every week they fill in two orders, decorative pots (P) and jelly jars (J). Since both goods retail and cost the same amount, their goal is to produce as much as possible. Tom can either produce 35 pots per day or 65 jars per day. Sam can either produce 45 pots per day or 85 jars per day. (a) Who has an absolute advantage in producing pots? (b) Who has an absolute advantage in producing jelly? (c) Show or prove who has comparative advantage in producing pots? (d) Who should produce what first and why? Tom works 6 days a week. Where: 6 = Lp + Lj His production capabilities are: P = 35(Lp) and J = 65(LJ) (e) How much would Tom produce if he spent all 6 days only producing pots and jars individually? (f) Solve, graph, and label Tom's production frontier equation in terms of pots, or make P as your y-axis. Tom and Sam are a hand-crafty couple. They recently made a deal with a small nearby grocery store called Trading-With-Joe. Every week they fill in two orders, decorative pots (P) and jelly jars (J). Since both goods retail and cost the same amount, their goal is to produce as much as possible. Tom can either produce 35 pots per day or 65 jars per day. Sam can either produce 45 pots per day or 85 jars per day. (a) Who has an absolute advantage in producing pots? (b) Who has an absolute advantage in producing jelly? (c) Show or prove who has comparative advantage in producing pots? (d) Who should produce what first and why? Tom works 6 days a week. Where: 6 = Lp + Lj His production capabilities are: P = 35(Lp) and J = 65(LJ) (e) How much would Tom produce if he spent all 6 days only producing pots and jars individually? (f) Solve, graph, and label Tom's production frontier equation in terms of pots, or make P as your y-axis.