Solve Michaels opportunity cost is 2 sculptures for each painting he produces. Solve How do we know this? If he devotes all of his time to sculptures, he can produce 10. Solve If he devotes all of his time to paintings, he can produce 5. Solve The ratio 10:5 is the same as 2: Michael is therefore twice as fast at producing sculptures as he is at producing paintings. Solve Angelos opportunity cost is 3 sculptures for each painting he produces. Solve If he devotes all of his time to sculptures, he can produce 6. Solve If he devotes all of his time to paintings, he can produce 2. Solve The ratio 6:2 is the same as 3:

Questionsb. Solve For this question, we need to compare Michaels and Angelos relative strengths. Solve Michael produces 2 sculptures for every painting, and Angelo produces 3 sculptures for every painting. Solve Because Michael is only twice as good at producing sculptures, his opportunity cost of producing each painting is 2 sculptures instead of 3. Solve Therefore, Michael is the low-opportunity-cost producer of paintings. Solve

c. Solve If they specialize, Michael should paint and Angelo should sculpt. Solve You might be tempted to argue that Michael should just work alone, but if Angelo does the sculptures, Michael can concentrate on the paintings. Solve This is what comparative advantage is all about. Solve