For Each pound of tea, they spend:
M = 1 tray of biscuits
Z = 2/3 tray of biscuits
B = 3 trays of biscuits
So, Bill is better off by trading with the person. HE only has to spend 2 trays instead of 3 to get same amount of tea.
Similarly, For a pair of trays of biscuits, They spend:
M = 2 lbs of tea
Z = 3 lbs of tea
B = 2/3 lbs of tea
So, Mary and Zoe will trade off as for same amount of biscuits, they will spend much lesser.
By above analysis, We can see that Bill has comparitive advantage in the production of biscuits as it has lower opportunity cost. It can leverage this position and should produce biscuits.
Mary and Zoe should produce tea as they have comparitive advantage in production of tea.
Mary should produce 1/2 of tea for trade to get maximum consumption
Zoe should produce 2/3 for trade for maximum consumption
Bill should produce 1/3 of biscuits for trade for max consumption.
Opportunity cost for Mary for 1 tray of biscuits = 1 pound of tea Opportunity cost...
If Mark spends a day, he can produce 1 pound of tea or 1 tray of biscuits. Zach can produce 3 pounds of tea or 2 trays of biscuits, and Broden can produce 1 pound of tea or 3 trays of biscuits in a day. What is Mark’s, Zach’s and Broden’s opportunity cost for producing a tray of biscuits?
For Oscar, what is the opportunity cost of producing 1 pound of coffee? (add only number) pounds of bananas Oscar and Julia can both produce either bananas or coffee. Oscar can produce either 16 pounds of coffee and 0 pounds of bananas or 64 pounds of bananas and O pounds of coffee. Julia can produc elther 20 pounds of coffee and O pounds of bananas or 40 pounds of bananas and O pounds of coffee. (Round your answers to two...
3. Terms of trade Suppose that Greece and Austria both produce fish and cheese. Greece's opportunity cost of producing a pound of cheese is 4 pounds of fish while Austria's opportunity cost of producing a pound of cheese is 10 pounds of fish. By comparing the opportunity cost of producing cheese in the two countries, you can tell that _______ has a comparative advantage in the production of cheese and _______ has a comparative advantage in the production of fish. Suppose that Greece and Austria...
4. Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Desonia. Both countries produce potatoes and tea, each initially (i.el, before specialization and trade) producing 24 million pounds of...
1) True 2) False 7. Specialization and trade When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. Both countries produce grain and tea, each initially i.e., before specialization and trade) producing 24 million...
17. Terms of trade Suppose that France and Austria both produce fish and olives. France's opportunity cost of producing a crate of olives is 4 pounds of fish while Austria's opportunity cost of producing a crate of olives is 11 pounds of fish. By comparing the opportunity cost of producing olives in the two countries, you can tell that _______ has a comparative advantage in the production of olives and _______ has a comparative advantage in the production of fish. Suppose that France and Austria...
4. Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Candonia and Lamponia. Both countries produce potatoes and coffee, each initially (i.e., before specialization and trade) producing 6 million pounds of...
4. Specialization and tradeWhen a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other.The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Lamponia. Both countries produce potatoes and coffee, each initially (i.e., before specialization and trade) producing 18 million pounds of potatoes and 9 million...
Suppose Basil is maximizing his utility from consuming tea and crumpets. If the marginal utility of the last cup of tea was 24 units of utility and that of his last crumpet was 6 units of utility, which of the following is true? The price of tea is six times the price of crumpets The price of crumpets is four times the price of tea The price of tea and crumpets are equal The price of tea is four times...
Figure 2-1 4) Refer to Figure 2-1. Point A is A) technically efficient. B) unattainable with current resources. C) inefficient in that not all resources are being used. D) the equilibrium output combination. 5) Refer to Figure 2-1. Point B is A) technically efficient. B) unattainable with current resources. C) inefficient in that not all resources are being used. D) the equilibrium output combination. 6) Refer to Figure 2-1. Point C is A) technically efficient. B) unattainable with current resources....