In: Economics
Peter, Jim, and Mary have a catering business where they make appetizers and desserts. Every week Mary can make either 400 appetizers or 100 desserts. Jim can make either 300 appetizers or 50 desserts. Peter can make either 375 appetizers or 75 desserts.
If they need to make 100 desserts then the largest quantity of appetizers can they make is _ .
If they need to make 150 desserts then the largest quantity of appetizers they can make is _ .
Enter whole numbers.
Answer) We have to use the concept of specialization and opportunity cost in this case,Specialization implies that an individual/nation focuses on things it is comparatively better at and produce things where it will take less time,this way most of the things will be produced in lesser off time and everyone would be better off,opportunity cost implies cost of giving up doing one thing in favor of another or the cost of gains if an alternative would have been choosen,now in this case Mary can make either 400 appetizers or 100 desserts which means for every 1 dessert she has to let go of 4 appetizer,for Jim its either 300 appetizers or 50 desserts which means 1 dessert needs giving up of 6 appetizers,while for Peter it is 375 appetizers or 75 desserts which means 1 dessert needs giving up 5 appetizers,clearly opportunity cost in terms of appetizers is lowest for Mary,followed by Peter and then Jim,so first Mary should focus on desserts,followed by Peter and then Jim.
Answer is complete.Thank you!