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Unformatted text preview: OR H C = (1/2)Q C Q S = AMOUNT OF SKETCHES = 1 x H S [SINCE CAN PRODUCE 1 SKETCH PER HOUR] OR H S = (1)Q S H C + H S = 6 (1/2)Q C + (1)Q S = 6 [YOUR PRODUCTION POSSIBILITY FRONTIER] KID SISTER ALSO HAS 6 HOURS, BUT CAN PRODUCE A CLAY POT EVERY HOUR, OR A SKETCH EVERY 90 MINUTES (1)Q C + (3/2)Q S = 6 [KID SISTER’S PRODUCTION POSSIBILITY FRONTIER] OPPORTUNITY COST OF CLAY POT = 2/3 SKETCH OPPORTUNITY COST OF SKETCH = 3/2 CLAY POTS COMPARING TWO OF YOU : SINCE 1/2 < 1, YOU HAVE ABSOLUTE ADV. IN PRODUCING CLAY POTS SINCE 1 < 3/2, YOU ALSO HAVE ABSOLUTE ADV. IN PRODUCING SKETCHES SINCE 1/2 < 2/3, YOU HAVE COMPARATIVE ADV. IN PRODUCING CLAY POTS SINCE 3/2 < 2, KID SISTER HAS COMPARATIVE ADV. IN PRODUCING SKETCHES...
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This note was uploaded on 01/21/2011 for the course ECON 252 taught by Professor Robertholand during the Spring '08 term at Purdue University.
- Spring '08