Chapter+3+-+Questions+&+Answers+(YD)

YoDa Quiz Ch.3

MAESTRO can make 4 Violins or 16 Cellos in 5 hours. His new competitor FACTORY can make 12 Violins or 24 Cellos in 5 hours. a) Who has the absolute advantage in making Violins? b) Who has the comparative advantage in making Cellos? c) Draw a Production Possibilities Frontier graph. d) If trade were to happen between the MAESTRO and the FACTORY, who should specialize in which product? Would both of them benefit from trade? Why or why not?

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