Question

The city of New Orleans aims to make production of both iazz music and alligator meat more efficient. The table below displays the amount of time both Gatomen and Jazzyboys take to produce one unit of each. Answer the following questions based on the numbers 2. Am ount of timeto produce one Amount of timeto come up with pound alligator meat, A (hrs)a polished music piece, M (hrs)» 16o Gatormen* a. Who has absolute advantage in the production of both alligator meat (A) and music (M)? Explain. - b. Determine the amount both Gatormen and Jazzyboys can produce in eight hours. Use this information to graph a production possibilities frontier for the eight hour shift for both trade partnerS. * c. Who has comparative advantage in the production of both meat and music? Show your calculations and explain d. Based on the information, provide the cost ratios (price-ratios) at which both parties would be willing and able to trade. Express them as a price interval for each good traded.» e. Would a price of 1A-1M work for trade to take place between Gatormen and Jazzybovs?» f. Prove gains of trade, ifat all, with numbers. g. If Gatormen specializes in alligator meat, what would be an example of export price risk they may face and its effect on their terms of trade?.

Answer 1

a) Jazzyboys has absolute advantage in production of alligator meat(A). Jazzyboys have absolute advantage in production of polished music piece.

b) Amount produced by both in 8 hours will be as per below table:

	Amount of alligator meat produced in 8 hrs (in pounds)	No of Polished Music pieces produced in 8 hrs (Count)
Gatormen	1.3	Less than 1
JazzyBoys	1.6	2

The production possibilities frontier graph is as per the enclosed image.

Passikilitie her to atosmen OS DIS 20 25 30 Pelished uaic Pieces Bo g- 2 4 62 10 12

c) The opportunity cost for Producing Polished Music Pieces for Gatormen as per below table & as per PPF is

1 Music Piece = 20.8 pounds of Alligator Meat

Hrs	Alligator Meat	Polished Music Pieces
8	1.3	0.5
16	2.6	1
24	3.9	1.5
32	5.2	2
40	6.5	2.5
48	7.8	3

The opportunity cost for Producing Polished Music Pieces for Jazzy Boys as per below table and as per PPF is

1 Music Piece = 4.8 Pounds of Meat

Hrs	Alligator Meat	Polished Music Pieces
8	1.6	2
16	3.2	4
24	4.8	6
32	6.4	8
40	8	10
48	9.6	12

So Jazzy Boys has a comparative advantage in selling Music Pieces.

Similiarly Opportunity cost of Gatormen for Alligator meat is

1 Pound of alligator meat = 2.3 Music Pieces

Opportunity cost for Jazzyboys for Alligator meat is

1 Pound of Alligator Meat = 7.5 Pieces of Music

Gatormen has a comparative advantage in selling Alligator Meat.

e) Such an arrangement would not work in either's favor.