Business > Solutions Guide > University of California, DavisFOR 50ECN_1A_Homework (All)

University of California, DavisFOR 50ECN_1A_Homework

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Question 1 a. To produce 1 pound of grass fed beef NautralBerg gives up 1.50 pounds of organic coffee b. Based on the table we can see that NaturalBerg has absolute advantage in organic coffee but c... omparative advantage in organic coffee c. Based on comparative advantage OrganicVille should specialize in producing grass fed beef d. If the NaturalBerg and OrganicVille specialize and then trade 50 pounds of organic coffee for 50 pounds of grass fed beef with each other both countries can consume outside their individual PPFs e. If OrganicVille splits its resources evenly between organic coffee and grass fed beef then it can consume without trade 300 pounds of organic coffee and 225 pounds of grass fed beef Question 2 a. To produce 1 gadget Denise gives up 6/5 of a widget b. From the table we can say that Denise has absolute advantage in gadgets and Evelyn in widgets c. From the table we can say that Evelyn has comparative advantage in widgets and Denise in gadgets d. For Evelyn, the opportunity cost of producing 4 gadgets is 15 widgets e. If Denise and Evelyn specialize and trade with each other based on comparative advantage then Denise will buy widgets and sell gadgets [Show More]

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