How trade creates value ( Chapter 2 ) Max Daily Production Steaks Shrimp ( lbs .
Question:
How trade creates value Chapter
Max Daily Production
Steaks Shrimp lbs
Fry Daddy
Grill Master
Refer to the above production data table for Fry Daddy and Grill Master. The Max Daily Production shows the quantity of Steaks OR pounds of Shrimp that each could produce in a day. For example, Fry Daddy could produce either steaks OR pounds of shrimp or any combination using the : ratio.
Draw the Production Possibilities Frontier for each company. points
What is the opportunity cost for Grill Master to produce one steak? points
What is the opportunity cost for Fry Daddy to produce one steak? points
Who has the comparative advantage for producing steaks? points
Assume they see the advantages of specialization and decide to trade. How many total steaks and pounds of shrimp would be produced? steaks and pounds of shrimp points
What are the terms of fair trade? pounds of shrimp for one steak points