Pick two pounds of coffee beans

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Susan can pick four pounds of coffee beans in an hour or gather two pounds of nuts. Tom can pick two pounds of coffee beans in an hour or gather four pounds of nuts. Each works six hours a day.

a. Would it be possible for Susan and Tom in total to gather 26 pounds of nuts and gather 20 pounds of coffee each day? If so, how much of each good should each person pick?

b. Now suppose that Susan and Tom could buy or sell coffee and nuts in the world market at a price of $2 per pound of coffee and $2 per pound of nuts. If each person specialized completely in the good for which they had a comparative advantage, how much could they earn by selling all that they produce.

c. In light of their ability to buy and sell in the world market at the stated prices, show on a graph (or use words to describe) all combinations of the two goods it would be possible for them to consume.

Reference no: EM132465659

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