3.

Katie Dough is a successful dentist and a wonderful pastry chef. She earns $800 a day on average in her dental practice. Her friends often cajole her into preparing mouth-watering pastries for their weekend card parties rather than using the catering service that charges the group $100 to prepare the pastries. If she makes the pastries, she must find time in her busy day to do so instead of practicing dentistry. Should Katie agree to make pastries for her friends?

No, because the opportunity cost of dentistry is higher than the opportunity cost of creating pastries.

Yes, because Katie has a comparative advantage in creating pastries.

No, because Katie can do both equally well and has an absolute advantage in both.

Yes, because she enjoys making the pastries for her friends.

Yes, because the opportunity cost of dentistry is higher than the opportunity cost of creating pastries.