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Calculate sue opportunity cost of producing a cap

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Reference no: EM131611428

Question: In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets.

a. Calculate Sue's opportunity cost of producing a cap.

b. Calculate Tessa's opportunity cost of producing a cap.

c. Who has a comparative advantage in producing caps?

d. If Sue and Tessa specialize in producing the good in which they have a comparative advantage and then trade 1 jacket for 15 caps, who gains from the specialization and trade?

Reference no: EM131611428

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