Please answer and graph letters e and f. Thanks! Clark and Clester live in the b
ID: 1133240 • Letter: P
Question
Please answer and graph letters e and f. Thanks!
Clark and Clester live in the beautiful town of Pagudpud, Ilocos Norte. They own a small business in which they make earrings and necklaces and sell them to the people who visit the beach. Clark can make 18 earrings or 6 necklaces per hour. Clester is a little bit slower and can make only 15 earrings or 3 necklaces in an hour.
a. For Clark what is the opportunity cost of a necklace? do not answer in sentence. direct like 1 ice cream......so with the others letters
b. For Clester what is the opportunity cost of a necklace?
c. Who has the comparative advantage in the production of necklace?
d. Who has the comparative advantage in the production of earrings?
e. Assume that Clark works one hour per day for six days in a week in the business, and if Clark is in the business of his own, give the possible combinations of necklaces and earrings that he can do for a week. Graph these possible combination on a bond paper, format of your combination should be 0/0,0/0,0/0
f. Assume that Clester works one hour per day for six days in a week in the business, and if Clester is in the business of his own, give the possible combinations of necklaces and earrings that he can do for a week. Graph these possible combination on a bond paper, format of your combination should be 0/0,0/0,0/0
Explanation / Answer
a. For Clarke, the opportunity cost of a necklace is the number of earrings given up and that is 3 earrings per necklace.
b. For Clester, the opportunity cost of a necklace is 5 earrings per necklace.
c. Comparative advantage as defined in the theory by Ricardo as a country has the comparative advantage in producing a particular good if it can produce that good at lower opportunity cost compared to any other country. Here, Clarke gives up less amount of earrings compared to Clester implies Clarke has a comparative advantage in producing necklace.
d. Comparative advantage in the production of earrings is with Clester as it gives up less amount of necklace compared to Clarke.i.e. lower opportunity cost in terms of a necklace.
e. If Clarke works for 6 days and one hour each day that means he works for 6hours per week and make 108 earrings or 36 necklaces.
f. Similar to part (e) If Clester works for 6hours per week and make 90 earrings or 18 necklaces.