economics macroeconomics

timer Asked: Dec 19th, 2018

Question description

5. The monthly productivity of two workers is as follow: Alex 300 Pants & 100 bikes and Joel 100 pants & 50 bikes.

a. Which one has an absolute advantage in the production of pants? bikes?

b. Which one has a comparative advantage in the production of pants? bikes

c. Assuming that both Alex and Joel spend the whole year producing pants and / or bikes, find and graph the resulting combination of goods each worker can produce in a year.

d. Suppose that a pair of pants is sold for $ 30.00 and a bike for $100.00, how should they allocate their resources and time in production (assuming comparative advantage). Find their joint total revenue for the year.

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