Project #58427 - ASAP

1. Explain the difference between absolute advantage and comparative advantage. Which is 
more important in determining trade between individuals or countries? Is it absolute advantage 
or comparative advantage? Why? 
 
2. Let us assume two students must prepare a presentation for their marketing class. As part of 
their class presentation, they must do a series of calculations and prepare 50 PowerPoint 
slides. It would take Larry 10 hours to do the required calculation and 10 hours to prepare the 
slides. It would take Kate 12 hours to do the series of the calculations and 20 hours to prepare 
the PPT slides. 
 
a. How much time would it take the two students to complete the project if they 
divide the two tasks equally? 
b. How much time would it take the two students to complete the project if they 
use comparative advantage and specialize in calculating or preparing slides? 
c. If Larry and Kate have the same opportunity cost of $5 per hour, is there a 
better solution than for each to specialize in calculating or preparing slides? 
 
3. Let us assume there are only two countries in the world, and the two countries face the 
following production possibilities frontiers. Further assume that the two countries produce 
popcorn and peanuts. 
 
 
 
a. Assume that country A and country B 
decide to use half of the resources in 
the production of each good. Indicate 
the points of the maximum output of 
each good on the graphs for each 
country as point A under such resource 
use. 
 
 
b. Assume the two countries choose 
autarky and do not trade. What would 
be the total world production of popcorn 
and peanuts under the autarky? 
 
 
 
 

 

Subject Business
Due By (Pacific Time) 02/17/2015
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