PPF, OPPORTUNITY COST, AND GAINS FOR TRADE

PPF , OPPORTUNITY COST , AND GAINS FOR TRADE Q1 . Sara and Sid produce boards and sails for windsurfing . Sara can produce either 15 boards and zero sails , or 10 sails and zero boards Sid , on the other hand , can produce either 10 boards and zero sails , or 15 sails and zero boards . Draw a graph illustrating the PPF (Production Possibilities Frontier ) for both Sara and Sid (on the same graph ) for boards and sails (a ) Calculate Sara 's opportunity cost of a board

Sara 's opportunity cost of a board is 1 .5 sails

. If she uses all her resources to produce boards she can make 15 , and if she uses all his resources to produce sails , she can make 10 . For each board Sara makes she forgoes making 1 .5 sails (b ) Calculate Sid 's opportunity cost of a board

Sid 's opportunity cost of a board is 2 /3 sails . If Sid uses all his resources to produce boards he can make 10 , and if he uses all his resources to produce sails , he can make 15 a day . For each board Sid makes , he forgoes making 2 /3 of a sails (c ) Who has a comparative advantage in producing boards

Sid has a comparative advantage in producing boards because his opportunity cost of a board is less than Sara 's (d ) Who has a comparative advantage in producing sails

Sara has a comparative advantage in producing sails because her opportunity cost of a sail is less than Sid...