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12. In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. a. Calculate Sue's opportunity cost of producing a cap. b. Calculate Tessa's opportunity cost of produc- ing a cap. c. Who has a comparative advantage in produc- ing caps? d. If Sue and Tessa specialize in producing the good in which each of them has a compara- tive advantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade?

12. In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. a. Calculate Sue's opportunity cost of producing a cap. b. Calculate Tessa's opportunity cost of produc- ing a cap. c. Who has a comparative advantage in produc- ing caps? d. If Sue and Tessa specialize in producing the good in which each of them has a compara- tive advantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...
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12. In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. a. Calculate Sue's opportunity cost of producing a cap. b. Calculate Tessa's opportunity cost of produc- ing a cap. c. Who has a comparative advantage in produc- ing caps? d. If Sue and Tessa specialize in producing the good in which each of them has a compara- tive advantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade?
Transcribed Image Text:12. In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. a. Calculate Sue's opportunity cost of producing a cap. b. Calculate Tessa's opportunity cost of produc- ing a cap. c. Who has a comparative advantage in produc- ing caps? d. If Sue and Tessa specialize in producing the good in which each of them has a compara- tive advantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade?
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