Assume that Bob can either type 6 page per hour or bake 2 cakes. His wife Mary can type 12 page per hour or bake 4 cakes.

a) Draw the Production Possibility Frontier (PPF) for each person and calculate the comparative advantage of each person in the above example.

b) Following from part (a), do you think that complete specialization is possible? Explain. Will there be any trade between Bob and Mary?

c) Let Bob update his skills. Now he can either type 6 page per hour or bake 4 cakes. His wife types 12 page per hour or bakes 4 cakes (as before). Calculate the comparative advantage of each person in this case and show the gain from trade between Bob and Mary.