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microbook_3e-page32

# microbook_3e-page32 - Homework#2 problems#3 and 8 from Ch 2...

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Homework #2 problems #3 and 8 from Ch. 2, p. 41–42 of Case/Fair Principles… (6th ed.) and a few of my own problems 3. Kristin and Anna live in the beach town of Santa Monica. They own a small business in which they make wristbands and potholders and sell them to people on the beach. Kristen can make 15 wristbands per hour, but only 3 potholders. Anna is a bit slower and can make only 12 wristbands or 2 potholders in an hour. output per hour Kristin Anna Wristbands 15 12 Potholders 3 2 a. For Kristin and for Anna what is the opportunity cost of a potholder? Who has a comparative advantage in the production of potholders? Explain. b. Who has a comparative advantage in the production of wristbands? Explain. c. Assume that Kristin works 20 hours per week in the business. If Kristin were in business on her own, graph the possible combinations of potholders to wristbands that she could produce in a week. Do the same for Anna.
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