Ch. 2 Comparative Advan

Ch. 2 Comparative Advan - the outputs are Wash Wax Peter 4...

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ECON 1B – ESTILL COMPARATIVE ADVANTAGE EXAMPLES From Dr. Rudy Gonzalez A. Peter can either wash one car per hour or wax one. Paul can either wash three cars per hour or wax two. Cost to Peter per car wax = 1 wash Cost to Paul per car wax = 1.5 wash Cost to Peter per car wash = 1 wax Cost to Paul per car wash = 2/3 wax Peter has the comparative advantage (i.e. low cost producer) in ___________. Paul has the comparative advantage in ____________. If each works eight hours and divides the time allocating 4 hours to each activity
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Unformatted text preview: the outputs are: Wash Wax Peter 4 4 Paul 12 8 16 12 They can do better by having Peter only waxing and Paul increasing the time allocated to washing by 2 hours: Wash Wax Peter 8 Paul 18 4 18 12 B. Rick can either catch four birds or two fish per day. Sue can either catch twelve birds or four fish per day. Cost to Rick per fish = 2 birds Cost to Sue per fish = 3 birds...
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