How do you show an excel graph of the explanation to part C? together they can produce a total of 28 pints of berries and 48 of honey...do I graph those together?

Economics 540 Doug Short, Assignment No. 1.2

Winnie and Tigger both need to gather honey and also pick some berries. The following table describes how much each of them can accomplish in one hour if that hour is spent either picking berries or gathering honey:

Berries Picked in 1 Hour: Honey gathered in 1 Hour:

Tigger: either 3 pints of Berries or 1 pint of Honey

Winnie: either 6 pints of Berries or 6 pints of Honey

(a) Calculate the opportunity costs of both activities for both Winnie and Tigger.

The opportunity cost for Winnie is 6 (pints of honey) - 6 (pints of berries) = 0. This is a fixed opportunity cost as the slope of the line is consistent.

The opportunity cost for Tigger is 1 (pint of honey) - 3 (pints of berries) = -2. This is a fixed opportunity cost as the slope of the line is consistent.

(b) Demonstrate that they could both be made better off by trading tasks and specializing.

Since Winnie has the comparative advantage, it would be to Tigger's benefit to focus on specializing in picking berries and trade Winnie for honey.

(c) Use excel charts to create a diagram which shows how the production possibilities curve for an 8-hour workday for Tigger might shift if the two of them were to reach an agreement to trade berries for honey at the average (or mean) opportunity cost of honey in terms of berries for the two of them.

The best-case scenario is when Tigger Produces berries and Winnie produces Honey. They can exchange honey for berries at a rate of 2 pints of berries to one pint of honey. They both benefit from the exchange - Winnie now gets 2 pints of berries versus only one per pint of honey & Tigger gets a pint of honey at a cost of only 2 pints of berries versus 3 pints of berries.