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Principles of Microeconomics

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 6PA

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5. Answer the questions using the following information. Aaron & Oscar decide to go into business
together making iPads and Selfie Sticks. Using the information, answer the questions below.
IPads
hour
per
20
Selfie Sticks
per
hour
9:41
Aaron
25
Oscar
10
25
a) Who has absolute advantage in making iPads?
b) Who has absolute advantage in making Selfie Sticks?
c) What is the opportunity cost of making one iPad for Aaron? (SHOW WORK)?
d) What is the opportunity cost of making one Selfie Stick for Aaron?
e) What is the opportunity cost of making one iPad for Oscar (SHOW WORK)?
f) What is the opportunity cost of making one Selfie Stick for Oscar?
g) Create a comparative advantage chart for Aaron and Oscar using the opportunity cost
figures you found in parts c
h) Who has comparative advantage in making iPads? Who has comparative advantage in
making Selfie Sticks? How do you know this? Circle the items in which each individual
has comparative advantage in the chart created from part g).
f (create a chart like the one from your notes).

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