Ginny and Lucia 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. Ginny takes 5 hours to brew a gallon of root beer and 3 hours to make a pizza. Lucia takes 8 hours to brew a gallon of root beer and 4 hours to make a pizza. 1. Ginny's opportunity cost of making a pizza is (1/2 gallon, 2 gallons, 3/5 gallon, or 1 2/3 gallons) of root beer, and Lucia's opportunity cost of making a pizza is (1/2 gallon, 2 gallons, 3/5 gallons, or 1 2/3 gallons) of root beer. 2. (Lucia or Ginny) has an absolute advantage in making pizza, and (Ginny or Lucia) has a comparative advantage in making pizza. 3. If Ginny and Lucia trade foods with each other, (Lucia or Ginny) will trade away pizza in exchange for root beer.
Ginny and Lucia 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. Ginny takes 5 hours to brew a gallon of root beer and 3 hours to make a pizza. Lucia takes 8 hours to brew a gallon of root beer and 4 hours to make a pizza. 1. Ginny's opportunity cost of making a pizza is (1/2 gallon, 2 gallons, 3/5 gallon, or 1 2/3 gallons) of root beer, and Lucia's opportunity cost of making a pizza is (1/2 gallon, 2 gallons, 3/5 gallons, or 1 2/3 gallons) of root beer. 2. (Lucia or Ginny) has an absolute advantage in making pizza, and (Ginny or Lucia) has a comparative advantage in making pizza. 3. If Ginny and Lucia trade foods with each other, (Lucia or Ginny) will trade away pizza in exchange for root beer.
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
Problem 3PA
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Ginny and Lucia 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. Ginny takes 5 hours to brew a gallon of root beer and 3 hours to make a pizza. Lucia takes 8 hours to brew a gallon of root beer and 4 hours to make a pizza.
1. Ginny's opportunity cost of making a pizza is (1/2 gallon, 2 gallons, 3/5 gallon, or 1 2/3 gallons) of root beer, and Lucia's opportunity cost of making a pizza is (1/2 gallon, 2 gallons, 3/5 gallons, or 1 2/3 gallons) of root beer.
2. (Lucia or Ginny) has an absolute advantage in making pizza, and (Ginny or Lucia) has a comparative advantage in making pizza.
3. If Ginny and Lucia trade foods with each other, (Lucia or Ginny) will trade away pizza in exchange for root beer.
4. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is (1/2 gallon, 2 gallons,3/5 gallon or 1 2/3 gallons) of root beer, and the lowest price that makes both roommates better off is (1/2 gallon, 2 gallon, 3/5 gallons, or 1 2/3 gallons) of root beer per pizza.
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