Question
Sharon and Amy are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza
Sharon and Amy 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. Sharon takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Amy takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.
Sharon's opportunity cost of making a pizza is (32,121,75,152 ) of root beer. (Sharon or Amy) has an absolute advantage in making pizza, and (Sharon or Amy) 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 (32,75,121,152 ) of root beer, and the lowest price that makes both roommates better off is (32,75,121,152 ) of root beet per pizza.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started