( LO1)

a. Is the point at 30 pounds of coffee per day, 12 pounds of nuts per day an attainable point? Is it an efficient point? What about the point at 24 pounds of coffee per day, 24 pounds of nuts per day?

b. On a graph with pounds of coffee per day on the vertical axis and pounds of nuts per day on the horizontal axis, show all the points you identified in Problem 9, parts a–e, and problem 10a. Connect these points with straight lines. Is the result the PPC for the economy consisting of Susan and Tom?

c. Suppose that Susan and Tom could buy or sell coffee and nuts in the world market at a price of $2 per pound for coffee and $2 per pound for nuts.

If each person specialized completely in the good for which he or she had a comparative advantage, how much could they earn by selling all their produce?

d. At the prices just described, what is the maximum amount of coffee Susan and Tom could buy in the world market? The maximum amount of nuts?

Would it be possible for them to consume 40 pounds of nuts and 8 pounds of coffee each day?

e. In light of their ability to buy and sell in world markets at the stated prices, show on the same graph all combinations of the two goods it would be possible for them to consume.