3. Opportunity Cost Cho and Ginny are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Cho takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Ginny takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Cho's opportunity cost of making a pizza is of root beer, and Ginny's opportunity cost of making a pizza is of root beer. has an absolute advantage in making pizza, and has a comparative advantage in making pizza. If Cho and Ginny trade foods with each other, will trade away pizza in exchange for root beer. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that wwould make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza.
3. Opportunity Cost Cho and Ginny are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Cho takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Ginny takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Cho's opportunity cost of making a pizza is of root beer, and Ginny's opportunity cost of making a pizza is of root beer. has an absolute advantage in making pizza, and has a comparative advantage in making pizza. If Cho and Ginny trade foods with each other, will trade away pizza in exchange for root beer. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that wwould make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza.
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 6SQP
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Transcribed Image Text:3. Opportunity Cost
Cho and Ginny are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza
and brewing root beer. Cho takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Ginny takes 7 hours to brew a gallon of root beer
and 5 hours to make a pizza.
Cho's opportunity cost of making a pizza is
of root beer, and Ginny's opportunity cost of making a pizza is
of
root beer.
has an absolute advantage in making pizza, and
has a comparative advantage in making pizza.
If Cho and Ginny trade foods with each other,
will trade away pizza in exchange for root beer.
The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that wwould make both roommates
better off is
of root beer, and the lowest price that makes both roommates better off is
of root beer per pizza.
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