Mathematics, 22.03.2021 21:00 lalkjlkeu2409
Sally and Amanda live in USA. They own a small business in which they
make sandwiches and juice and sell them to people in the town. As shown in
the table below, Sally can make 15 sandwiches per hour but only 3 cans of
juice. Amanda is a bit slower and can make only 12 sandwiches or 2 cans of
juice in an hour.
Output per Hour
Sandwich juice
Sally 15 3
Amanda 12 2
a) For Sally and for Amanda, what is the opportunity cost of cans of
juice? Who has a comparative advantage in the production of can of
juice? Explain your answer.
b) Who has a comparative advantage in the production of sandwiches?
Explain your answer.
c) Assume that Sally works 20 hours per week in the business.
Assuming Sally is in business on her own, graph the possible
combinations of juice and sandwiches that she could produce in a
week. Do the same for Amanda.
d) If Sally devoted half of her time (10 out of 20 hours) to sandwiches
and half of the time to juice, how many of each would she produce
in a week? If Amanda did the same, how many of each would she
produce? How many sandwich and cans of juice would be produced
in total?
e) Suppose that Amanda spent all 20 hours of her time on sandwiches
and Sally spent 17 hours on juice and 3 hours on sandwiches.
How many of each item would be produced in total?
f) Suppose that Sally and Amanda can sell all their sandwiches for $1
each and all their juice for $5.50 each. If each of them worked 20
hours per week, how should they split their time between
sandwiches and can of juice? What is their maximum joint revenue?
Answers: 3
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Sally and Amanda live in USA. They own a small business in which they
make sandwiches and juice and...
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