Question

Mountain Mack and Big Lake Bob spend their time carving fishing lures and duck decoys. The table below shows their production possibilities schedules, which describe various combinations of fishing lures and duck decoys they each can carve efficiently in a week. Production Possibilities Schedules Mountain Mack Big Lake Bob Fishing Lures Duck Decoys Fishing Lures Duck Decoys 40 0 100 0 32 10 80 6 24 20 60 12 16 30 40 18 8 40 20 24 0 50 0 30 a. If Mountain Mack splits his week evenly between carving fishing lures and duck decoys, what is the maximum number of fishing lures and duck decoys he could carve? 8 fishing lures and 10 duck decoys 20 fishing lures and 25 duck decoys 24 fishing lures and 20 duck decoys 40 fishing lures and 50 duck decoys b. If Big Lake Bob splits his week evenly between carving fishing lures and duck decoys, what is the maximum number of fishing lures and duck decoys he could carve? 50 fishing lures and 15 duck decoys 60 fishing lures and 12 duck decoys 20 fishing lures and 6 duck decoys 100 fishing lures and 30 duck decoys c. Combined, how many fishing lures and duck decoys could Mountain Mack and Big Lake Bob carve if each one split his week between the two products? 140 fishing lures and 80 duck decoys 70 fishing lures and 40 duck decoys 28 fishing lures and 16 duck decoys 84 fishing lures and 32 duck decoys d. has the comparative advantage in carving fishing lures and has the comparative advantage in carving duck decoys. e. If both Mountain Mack and Big Lake Bob choose to specialize in the product in which he has a comparative advantage, how many of each product could they produce together? 84 fishing lures and 32 duck decoys 140 fishing lures and 80 duck decoys 40 fishing lures and 30 duck decoys 100 fishing lures and 50 duck decoys

Answer 1

Part a

Mountain Mack can spend all his time in carving either 40 Fishing lures or 50 Duck Decoys. The production possibilities suggest that for every 8 fishing lures carved, he has to reduce carving on 10 duck decoys. This implies that the opportunity cost of 1 fishing lure is 10/8 or 1.25 duck decoys.

Now if he split his week evenly, he would be carving half the number of his maximum carvings which in this case, becomes 20 fishing lures and 25 duck decoys. To check if this is true, assume that he carves only fishing lures. With an opportunity cost of carving 1 fishing lure being 1.25 duck decoys, to carve 20 fishing lures less to make it 20, 20*1.25 or 25 duck decoys can be carved.

Hence the correct combination is 20 fishing lures and 25 duck decoys

Part b

Big Lake Bob can also spend all his time in carving either 100 Fishing lures or 16 Duck Decoys. The production possibilities suggest that for every 20 fishing lures carved, he has to reduce carving on 6 duck decoys. This implies that the opportunity cost of 1 fishing lure is 6/20 or 0.3 duck decoys.

Now if he split his week evenly, he would be carving half the number of his maximum carvings which in this case, becomes 50 fishing lures and 15 duck decoys. To check if this is true, assume that he carves only fishing lures. With an opportunity cost of carving 1 fishing lure being 0.3 duck decoys, to carve 50 fishing lures less to make it 50, 50*0.3 or 15 duck decoys can be carved.

Hence the correct combination is 50 fishing lures and 15 duck decoys

Part c

For this part, add the results of part a) and part b). In total, when they both split, a total of 70 fishing lures and 40 duck decoys can be carved.