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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?
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How many cases should you buy, how long should you wait to sell them, and how much money will you receive at the time of their sale?
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What factors might these types of stores have in common behind their declines? How would you determine which were important and which were not?
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