C who produces caps jackets d if sue and tessa

c. Who produces caps? Jackets?
d. If Sue and Tessa specialize and trade, who will gain?
31. The U.S. and France can produce wine and cheese at the following rate.
Wine (bottles) and Cheese (lbs) Per Day
Wine Cheese
U.S. 100 40
France 90 30
a. Who has the absolute advantage in producing Wine? Cheese
b. Who has a comparative advantage in producing wine? Cheese?
c. Who specializes to produce wine? Cheese?
32. Define opportunity cost. What was your opportunity cost of coming to class today?
33. Labor data
a. What are the limitations of using the headline unemployment rate to discuss how workers are
doing?
b. List four examples of individuals who would be classified as “not in the labor force.”

34. Jamie owns a bakery that he runs on his own. He works 112 hours per week and switches his time
between baking cakes and pies. Each cake requires 4 hours of his time, while each pie requires 2 hours.
Assume his labor is the only input in production.
a. Illustrate Jamie’s weekly Production Possibility frontier below, putting cakes on the x-axis and
pies on the y-axis. Label everything as appropriate.
b. What is Jamie’s opportunity cost of producing one pie? Show your work.
Use the diagram below to answer the following question:
35. The above figure shows the market for biologists. The government decides to set a minimum wage
for biologists of $18 per hour. After this minimum wage is in effect, unemployment equals ________
workers.

e. 200
Short Answer: Read each question carefully and answer as directed.
36. Assume the following equations for supply and demand in the market for coffee:
Q
D
= 100 – 2P Q
S
= 50 + 3P
a. Solve for the equilibrium price in this market. Show your work.
b. Solve for the equilibrium quantity in this market. Show your work.
c. Use the simple competitive supply and demand model to graph and predict the impact of an
increase in the number of sellers in the coffee market (use the general model, you do not need to
draw the exact equations above). Be sure to label all axes, curves, and equilibrium points. What
has happened to the equilibrium price and quantity?