Jane and Brad both produce nuts and coffee. They each prefer to consume a diet that is half nuts and half coffee. Both have access to the same resources. If Jane focuses on producing only coffee, she can produce 20 pounds of coffee in a week. If she only produces nuts, she can produce 40 pounds of nuts in a week. Brad can produce a maximum of 15 pounds of coffee in a week. He could also choose to produce only nuts, in which case he can produce 20 pounds of nuts a week.
Part 1. Who has an absolute advantage in coffee production? Who has an absolute advantage in nut production?
A. Jane has an absolute advantage in coffee, and Brad has an absolute advantage in nuts.
B. Jane has an absolute advantage in both coffee and nuts.
C. Brad has an absolute advantage in both coffee and nuts.
D. Brad has an absolute advantage in coffee, and Jane has an absolute advantage in nuts.
Part 2. a. What is the opportunity cost for Jane to produce one more pound of nuts? pounds of coffee
b. What is the opportunity cost for Jane to produce one more pound of coffee? pounds of nuts
c. What is the opportunity cost for Brad to produce one more pound of nuts? pounds of coffee
d. What is the opportunity cost for Brad to produce one more pound of coffee? pounds of nuts
Part 3. Who has a comparative advantage in nut production? Who has a comparative advantage in coffee production?
A. Brad has a comparative advantage in both coffee and nut production.
B. Jane has a comparative advantage in both coffee and nut production.
C. Brad has a comparative advantage in nut production, and Jane has a comparative advantange in coffee production.
D. Jane has a comparative advantage in nut production, and Brad has a comparative advantange in coffee production.
