Question number 3 ,8, 9

off. Diego and Darnell 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. Diego takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. Darnell takes 6 hours to brew a gallon of root beer and 4 hours to make a pizza. a. What is each roommate's opportunity cost of making a pizza? Who has the absolute advantage in making pizza? Who has the comparative advantage in making pizza?b. If Diego and Darnell trade foods with each other, who will trade away pizza in exchange for root beer? c. The price of pizza can be expressed in terms of gallons of root beer. What is the highest price at which pizza can be traded that would make both roommates better off? What is the lowest price? Explain.6. The following table describes the production possibilities of two cities in the country of Baseballia: a. For each country, graph the production Pairs of Red possibilities frontier. Suppose that without trade Socks per Worker Pairs of White the workers in each country spend half their time per Hour Socks per Worker producing each good. Identify this point in your per Hour graphs. Boston b. If these countries were open to trade, which w W Chicago country would export shirts? Give a specific N numerical example and show it on your graphs. Which country would benefit from trade? a. Without trade, what is the price of white socks (in Explain. terms of red socks) in Boston? What is the price in c. Explain at what price of computers (in terms of Chicago? shirts) the two countries might trade. b. Which city has an absolute advantage in the d. Suppose that China catches up with American production of each color sock? Which city has a productivity so that a Chinese worker can comparative advantage in the production of each produce 100 shirts or 20 computers in a year. What color sock? pattern of trade would you predict now? How c. If the cities trade with each other, which color sock does this advance in Chinese productivity affect will each export? the economic well-being of the two countries' d. What is the range of prices at which mutually citizens? beneficial trade can occur? 9. Are the following statements true or false? Explain in 7. A German worker takes 400 hours to produce a car each case. a. "Two countries can achieve gains from trade even and 2 hours to produce a case of wine. A French if one of the countries has an absolute advantage worker takes 600 hours to produce a car and X hours in the production of all goods." to produce a case of wine. b. "Certain talented people have a comparative a. For what values of X will gains from trade be advantage in everything they do." possible? Explain. c. "If a certain trade is good for one person, it can't b. For what values of X will Germany export cars be good for the other one." and import wine? Explain. d. "If a certain trade is good for one person, it is 8, Suppose that in a year an American worker can always good for the other one." produce 100 shirts or 20 computers and a Chinese e. "If trade is good for a country, it must be good for worker can produce 100 shirts or 10 computers. everyone in the country."