3.2
3.2
a) This is not feasible,
because baking 16 loaves takes 2 hours, and making 28 haircuts takes 7,
which adds up to 9 while Helen only has 8 hours.
b) This point lies on the
production possibility curve. By the above reasoning, 16 haircuts takes
4 hours, and 32 loaves also takes 4 hours, and 4+4=8, the total number
of hours available.
c) This point is inside
the curve, as 24 loaves require 3 hours, and 18 haircuts 4 ½, which is
less than 8.
3.3
a) True because the marginal rate of
substitution between the two products is the same for both individuals.
b) Not necessarily. She may have a
comparative advantage in being a doctor, while the companies may have a
comparative advantage in cleaning, in which case the doctor should not
clean her office. Remember that what is important is comparative
advantage, not absolute advantage.
c) False. Actually, the contrary happens,
as the tradeoff between the two products become steeper (less horizontal
axis product for more vertical axis product).
3.4
a) Not necessarily, it depends on how
many they have to do and how many hours they have. But Nancy should
specialize in clutches.
b) Yes.
c) Yes, as she can do more than Bill in a
day.
d) Yes.
e) Appears so.
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