Question

plz help with this homework, plz don't copy answers that were answered before. Thank you and write in text and not image since its hard to read from.

Smoothies Cell phones Martha 15 per day 3 per day Kelly 10 per day 1 per day This table shows the how many smoothies or cell phones Martha and Kelly can each produce if they put all of their respective resources into producing that good alone. Use this information to answer the following questions: 1. Who has an absolute advantage in the production of smoothies? 2. Who has an absolute advantage in the production of cell phones? 3. What is Martha's opportunity cost of producing one smoothie (in terms of cell phones)? 4. What is Kelly's opportunity cost of producing one smoothie (in terms of cell phones)? 5. What is Martha's opportunity cost of producing one cell phone in terms of smoothies)? 6. What is Kelly's opportunity cost of producing one cell phone (in terms of smoothies)? 7. If each person specializes in the production of the product in which she has a comparative advantage, who should produce smoothies? 8. If each person specializes in the production of the product in which she has a comparative advantage, who should produce cell phones? 2. Assume there are only two goods in the world: pizza and electric fans. Draw a production possibility frontier (PPF) illustrating the trade-off between the two (specific numbers are not needed - we are only looking for the basic shape of the PPF). On the same graph, draw new frontiers showing 1) what happens if a major plague reduced worldwide population significantly, and 2) if a machine is invented which doubles the number of fans that can be made in a day (but is irrelevant in the production of pizza).

Answer 1

Question 1

1. Martha has an absolute advantage in producing smoothies because she can produce more smoothies than Kelly.

2. Martha has an absolute advantage in producing cell phones because she can produce more cell phones than Kelly.

3. Martha's opportunity cost of 1 smoothie = Total cell phones given up/Total smoothies produced = 3/15 = 0.2 cell phone

4. Kelly's opportunity cost of 1 smoothie = Total cell phones given up/Total smoothies produced = 1/10 = 0.1 cell phone

5. Martha's opportunity cost of 1 cell phone = Total smoothies given up/Total cell phones produced = 15/3 = 5 smoothies

6. Kelly's opportunity cost of 1 cell phone = Total smoothies given up/Total cell phones produced = 10/1 = 10 smoothies

7. Kelly should produce smoothies because she has lower opportunity cost of producing a smoothie.

8. Martha should produce cell phones because she has lower opportunity cost of producing cell phones.

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