Suppose that Paulie and Vinny each can produce ice cream or

Suppose that Paulie and Vinny each can produce ice cream or t-shirts. The table below shows the quantity of each good that Paulie and Vinny each can produce in one hour, respectively, if they devote all of their time and effort into making the good. What is Paulie\'s opportunity cost of producing a cup of ice cream? (Round to two decimal places.) What is Vinny\'s opportunity cost of producing a t-shirt? (Round to two decimal places.) Paulie has a comparative advantage in and Vinny has a comparative advantage in

Solution

1.

Opporunity cost for Paulie for a ice cream = 17 / 2 = 8.5 t -shirts

2.

Opporunity cost for vinny for a t-shirt = 7/11 = 0.636 or 0.64 cup

3.

Opporunity cost for Paulie for a ice cream = 17 / 2 = 8.5 t -shirts

Opporunity cost for Paulie for a t -shirts = 2 / 17 = 0.12 ice cream

Opporunity cost for vinny for a ice cream= 11/7 =1.57 t-shirts

Opporunity cost for vinny for a t-shirt = 7/11 = 0.64 cup

from the above ,

we can say like this

Paulie has a comparative advantage in t-shirt and vinny has a comparative advantage in ice cream.