Elif can produce 6 pies or 30 cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1 hour. a) Draw the PPF lines for Elif and Ahmet. b) If each spends 30 minutes of each hour for producing pies and 30 minutes for producing cakes, how many pies and cakes does each produce? c) What is the opportunity cost of producing pies for Elif? What is the opportunity cost of producing pies for Ahmet?
Elif can produce 6 pies or 30 cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1
hour.
a) Draw the
b) If each spends 30 minutes of each hour for producing pies and 30 minutes for
producing cakes, how many pies and cakes does each produce?
c) What is the
of producing pies for Ahmet?
d) What is the opportunity cost of producing cakes for Elif? What is the opportunity
cost of producing cakes for Ahmet?
e) Who has a
advantage in producing cakes?
f) On the PPF lines, show what Elif produces and what Ahmet produces when they
specialize.
g) Suppose that they set the exchange price as 1 Pie = 3 Cakes. If they specialize and
trade, show an exchange situation that is beneficial for both (compared to the
situation you found at part (b))?
h) What is the minimum and maximum exchange price they could have determined for
an exchange that will be beneficial for both of them
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