Before Specialization in Trade. Assume this is the production possibility for Morofit and Lesofit Production OptionsMorofit Time Lesofit Time 1 Peanut.

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Presentation transcript:

Before Specialization in Trade

Assume this is the production possibility for Morofit and Lesofit Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

Who has the absolute advantage in production of Peanut Butter, T-Shirts Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

PB=Morofit T-Shirt= Morofit Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

What is Morofit’s Opportunity Cost of 1 Peanut Butter? 1 T-Shirt? Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

1 Peanut Butter= ½ T-Shirt 1 T-Shirt= 2 Peanut Butter Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

What is Lesofit’s Opportunity Cost of 1 Peanut Butter? 1 T-Shirt? Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

1 Peanut Butter=2T-Shirts 1 T-Shirt= 1/2 Peanut Butter Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

Who should produce Peanut Butter? Who should produce T-Shirts Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

Morofit=Peanut Butter Lesofit=T-Shirts Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

How many PB Can Morofit now produce in the 3 Hours? Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

3 Peanut Butter Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

How many T-Shirts Can Lesofit now produce in the 12 Hours? Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

3 T-Shirts Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

If Morofit and Lesofit want one t-shirt and 1-Peanut Butter what will be the world gain in T-shirts and Peanut Butter? Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours

1 T-Shirts for Morofit, 1 for Lesofit, 1 for the rest of the world 1 PB for Morofit, 1 for Lesofit, 1 for the rest of the world Production OptionsMorofit Time Lesofit Time 1 Peanut Butter 1 Hour1 Peanut Butter 8 Hours 1 T-Shirt2 Hours1 T-Shirt4 Hours Total Time3 HoursTotal Time12 Hours