QUESTION 1 Each person in this section can work eight (8) hours in a day. David and Hillary own a restaurant called Oscar's. There are only two actions they can perform: invent new Cocktails (C) and invent new Appetizers (A). The following table gives the number of hours required to either invent a Cocktail (C) or an Appetizer (A). Hours to Invent a Cocktail (C) Hours to Invent an Appetizer (A) David 8 Hillary 16 1)(4) Does either David or Hillary have an absolute advantage in inventing Cocktails (C)? Why? 2)(4) Does either David or Hillary have a comparative advantage in inventing Cocktails (C)? Why? 3)(4) If David and Hillary were to specialize in production, who should specialize in what? Why? 4)(6) Construct a joint PPF that includes both David and Hillary with Appetizers (A) on the vertical axis and Cocktails (C) on the horizontal. [It may be helpful if you first construct each PPF separately.] Thomas joins David and Hillary at Oscar's. Thomas also produces only 2 goods per the following table: Hours to Invent a Cocktail (C) Hours to Invent an Appetizer (A) Thomas 16 5)(4) Construct the new joint PPF that includes David, Hillary, and Thomas with Appetizers (A) on the vertical axis and Cocktails (C) on the horizontal. [It may be helpful if you first construct Thomas's PPF] 6)(4) If David, Hillary, and Thomas collectively decide to invent Cocktails (C) and provide them for free to students quarantined on campus, does that make (invented) Cocktails a public good? Why? 7)(4) Consider David, Hillary, and Thomas have a monopoly on new Cocktails (C). Redraw a joint PPF and indicate a production level consistent with the monopoly. Attach File Browse Local Files Browse Content Collection