Janet and Megan are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Janet takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Megan takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Janet's opportunity cost of making a pizza is of root beer, and Megan's opportunity cost of making a pizza is of root beer.
has an absolute advantage in making pizza, and has a comparative advantage in making pizza.
If Janet and Megan trade foods with each other, will trade away pizza in exchange for root beer.
The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is of root beer, and the lowest price that makes both roommates better off is of root beer per pizza.