Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kate's opportunity cost of brewing a gallon of root beer is what compared to Poorinma's? 3. Opportunity Cost Kate and Poornima are roommates. They spend

image text in transcribed

Kate's opportunity cost of brewing a gallon of root beer is what compared to Poorinma's?

image text in transcribed
3. Opportunity Cost Kate and Poornima 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. Kate takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Poornima takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Kate's opportunity cost of brewing a gallon of root beer is , and Poornima's opportunity cost of brewing a gallon of root beer is has an absolute advantage in brewing root beer, and has a comparative advantage in brewing root beer. If Kate and Poornima trade foods with each other, Kate will trade 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 5/7 gallon of root beer, and the lowest price that makes both roommates better off is 2/3 gallon of root beer per pizza

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Econometrics A Modern Approach

Authors: Jeffrey Wooldridge

7th Edition

1337558869, 978-1337558860

More Books

Students also viewed these Economics questions

Question

Always show respect for the other person or persons.

Answered: 1 week ago

Question

Self-awareness is linked to the businesss results.

Answered: 1 week ago

Question

1. Too reflect on self-management

Answered: 1 week ago