Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have ten hours of time available. The can use their time to do one of two things: make pancakes or make hamburgers. Bob can make two hamburgers in an hour or one pancake in an hour. Jake can make three pancakes in an hour or two hamburgers in an hour. Use this information to answer the following questions: a.) Draw Jake and Bob's PPFS, with hamburgers on the x-axis. b.) Give equations for Jake and Bob’s PPFS in y =mx+b form, still treating hamburgers as the x variable. c.) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? d.) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? e.) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hambruger? Why or why not?

Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have ten hours of time available. The can use their time to do one of two things: make pancakes or make hamburgers. Bob can make two hamburgers in an hour or one pancake in an hour. Jake can make three pancakes in an hour or two hamburgers in an hour. Use this information to answer the following questions: a.) Draw Jake and Bob's PPFS, with hamburgers on the x-axis. b.) Give equations for Jake and Bob’s PPFS in y =mx+b form, still treating hamburgers as the x variable. c.) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? d.) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? e.) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hambruger? Why or why not?

Name: Problem 2Consider a simple exchange economy with two people: Bob and
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Description: Problem 2Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have ten hoursof time available. The can use their time to do one of two things: make pancakes or make hamburgers.Bob can make two hamburgers in an hour or

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1.) both have ten hours of time available. The can use their time to do one of two things: make pancakes or make hamburgers. Bob can make ten hamburgers in an hour or two pancakes in an hour. Jake can make five pancakes in an hour or one hamburger in an hour. Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake a.) Draw Bob and Jake's PPFS with hamburgers on the x-axis. Give equations for both PPFS in y=mx+b form. b.) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? c.) Can Bob and Jake mutually benefit from trade if the terms of trade are one pancake per hamburger? Why or why not?
1. Kim owns a Porsche and a Toyota. The Porsche has a fuel economy of 15 miles per gallon (mpg) and she plans to drive it 3,000 miles this year. The Toyota gets 30 miles per gallon and she plans to drive it 15,000 miles this year. Suppose Kim can install a device that improves the fuel economy of any vehicle by 5 miles per gallon. However, she only has one of the devices. Which vehicle should she install it on if her goal is to minimize fuel consumption this year? Assume that the device does not hamper vehicle performance in any way.
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Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use thier their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following questions: a) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? b) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? c) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hamburger? Why or why not?
Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following question: Find the opportunity cost for hamburgers and pancakes for Bob and Jake.
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