3. Problems and Applications Q3

Alyssa and Crystal are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Alyssa takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Crystal takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.

Alyssa's opportunity cost of making a pizza is (2/3, 5/7, 1 , or 1 2/5)of root beer, and Crystal's opportunity cost of making a pizza is (2/3, 5/7, 1 , or 1 2/5)of root beer.

(Crystal or Alyssa)has an absolute advantage in making pizza, and (Crystal or Alyssa)has a comparative advantage in making pizza.

If Alyssa and Crystal trade foods with each other, (Crystal or Alyssa)will trade away pizza in exchange for root beer.

The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is (2/3, 5/7, 1 , or 1 2/5)of root beer, and the lowest price that makes both roommates better off is (2/3, 5/7, 1 , or 1 2/5).