Question
Liz and Joe both have bars, Liz produces smoothies and salads. In Liz's high tech bar, if she spend all her time making smoothies, she
Liz and Joe both have bars, Liz produces smoothies and salads. In Liz's high tech bar, if she spend all her time making smoothies, she can produce 30 an hour. If she spend all her time making salads, she can also produce 30 an Hour. If she splits her time equally between the two, she can produce 15 smoothies and 15 salads an hour. On the other hand Joe with his smaller bar, with only one blender that is slow and old. If Joe uses all his resources to produce smoothies he can produce 6 an hour. However, if he is good at making salads, because if he uses all his resources he can produce 30 salads an hour. (a) Present the above information in one Table form when both devote their resources in producing one item at a time. [4] (b) In which product(s) Liz has absolute advantage? [1] (c) In which product(s) Joe has absolute advantage? [1] (d) In which product(s) Liz has comparative advantage? [2] (e) In which product(s) Joe has comparative advantage? [2] (f) Who do you recommend to specialize in making smoothies? [1] (g) Who do you recommend to specialize in making salads? [1] (h) Draw a Table showing he two specializing in the production of commodity with comparative advantag
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