Calculate the optimal balance of trade

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Reference no: EM131163132

Scenario Kian and Rachel own a toy factory. Kian can build six toy ships per hour, earning a total of $30. Rachel can build two toy ships in one hour, earning $10. Kian and Rachel’s friend Jeffrey asks if one of them would build a dollhouse for his daughter’s birthday. He would pay $100 for the job. It would take Kian four hours to build the dollhouse. It would take Rachel six hours to build the dollhouse.

1. If the company were to start making dollhouses, how much should they charge? (Estimate or provide a range)

2. How would you describe the gains in this trade, if there are any?

3. Calculate the optimal balance of trade.

Reference no: EM131163132

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