Question

April can produce 15 dozen apple pies or 1 dozen croissants in one day. Arthur can...

  1. April can produce 15 dozen apple pies or 1 dozen croissants in one day. Arthur can produce 2 dozen apple pies or 10 dozen croissants in one day.

a. Draw the production possibilities frontiers for April and Arthur

b.What pattern of specialization and trade will benefit both April and Arthur? Why?

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Answer #2

a-

b-

Opportunity cost of producing 1 dozen of croissant :
for April = 15 dozens of apple pie
for Arthur = 2/10 = 0.2 dozens of apple pie
Since opportunity cost of producing 1 dozen of croissant is lower for Arthur so Arthur should specialize in the production of croissant. April should specialize in the production of apple pie.
Therefore, April will export apple pie and import croissants. Arthur will export croissant and import apple pie.

answered by: anonymous
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