Question 3 Person A and Person B produces purses and wallets. The production possibilities frontier below shows each persons production of wallets and purses based in an 8-hour day. 10 9 8 7 6 5 3 Person A wallets Person B wallets 10 9 8 7 6 5 4 3 2

Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
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Chapter3: Interdependence And The Gains Rrom Trade
Section3.1: A Parable For The Modern Economy
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Question 3
Person A and Person B produces purses and wallets. The production possibilities frontier below shows each
persons production of wallets and purses based in an 8-hour day.
10
9
8
7
6
5
4
3
2
Person A
wallets
+
1 2 3 4
+ + + + +
5 6
7
8
Who has the absolute advantage
in purses?
9 10 purses
Who has the absolute advantage
in wallets?
Who has a comparative
advantage in purses?
Who has a comparative
advantage in wallets?
What is the opportunity cost for
purses?
Person B
10
9
8
7
6
5
4
3
2
1
Choose...
Choose...
Choose...
Choose...
Choose...
wallets
+
1
2 3
4
5
6
+
7
+
8 9
10 purses
¶
(▶►
<▶
Transcribed Image Text:Question 3 Person A and Person B produces purses and wallets. The production possibilities frontier below shows each persons production of wallets and purses based in an 8-hour day. 10 9 8 7 6 5 4 3 2 Person A wallets + 1 2 3 4 + + + + + 5 6 7 8 Who has the absolute advantage in purses? 9 10 purses Who has the absolute advantage in wallets? Who has a comparative advantage in purses? Who has a comparative advantage in wallets? What is the opportunity cost for purses? Person B 10 9 8 7 6 5 4 3 2 1 Choose... Choose... Choose... Choose... Choose... wallets + 1 2 3 4 5 6 + 7 + 8 9 10 purses ¶ (▶► <▶
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