Economics (6th Edition)
Economics (6th Edition)
6th Edition
ISBN: 9780134105840
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 10, Problem 10.4.11PA
To determine

Applying the concept of sunk cost.

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Kiran and Amna live in IBA hostel. They own a small business in which they make brownies and pasta and sell them to people on campus. As shown in the table on the following page, Kiran can make 30 brownies per hour but only 6 bowls of pasta. Amna is a bit slower and can make only 24 brownies or 4 bowls of pasta in an hour Suppose that Kristen and Anna can sell all their brownies for PKR10 each and all their pasta bowls for PKR 50 each. If each of them worked 20 hours per week, how should they split their time between brownies and pasta? What is their maximum joint revenue?
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