Question

Maria and Simone 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. Maria takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Simone takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.1. Megan's opportunity cost of making a pizza is:_____.a. 2/3 gallon.b. 5/7 gallon.c.1 1/2 gallons.d. 1 2/5 gallons.Who has an absolute advantage in making pizza, and who has a comparative advantage in making pizza?2. If Megan and Susan trade foods with each other who will trade away pizza in exchange for root beer?3. 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.

Answer 1

Answer and Explanation:

The opportunity cost for pizza making of Megan is 2 ÷ 3  root beer gallon

And, the opportunity cost for pizza making of Susan  is 5 ÷ 7  root beer gallon

Also Megan earned an advantage for pizza making as she takes only two hours while on the other hand Susan takes  hours

And, the  opportunity cost of Megan is lower than the Susan that results that Megan has the comparative advantage this determines that there is a exchange for a root beer what Susan made

It could be better off by 5 ÷ 7  root beer gallon

And, the lesser price could be better of 2 ÷ 3  root beer gallon