What are the opportunity costs of producing a pie

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Reference no: EM132198008

Question: Paul, Noel, and Sandi work in a bakery where they make pies and cakes. In one day, Paul can make 30 pies or 10 cakes or any combination of these two goods that lie on the line containing these two production points. Noel can make 5 pies or 5 cakes or any combination of these two goods that lie on the line containing these two production points. Sandi can make 12 pies or 6 cakes or any combination of these two goods that lie on the line containing these two production points. Assume that PPF of each person is a straight line.

a. With cakes measured on the horizontal axis, draw the PPF for each person on separate graphs and then find the equations for each individual's PPF.

b. What are the opportunity costs of producing 1 pie in terms of the number of cakes for Paul, Noel, and Sandi? Who has the comparative advantage in the production of cakes?

c. Plot the joint PPF and find the equations of each segment of the joint PPF. Provide the relevant domain for each of these equations.

d. If 36 pies and 8 cakes are produced in the bakery, what does Paul produce? What do Noel and Sandi produce, respectively? If 18 cakes and 9 pies are produced, what do Paul, Noel, Sandi produce, respectively?

Reference no: EM132198008

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