ELIZABETH BRIAN

BREAD APPLES BREAD APPLES

20 0 10 0
10 10 5 15
0 20 0 30

1. What is the opportunity cost of Elizabeth (Brian) in producing 1 unit of bread (apple)

The opportunity cost of producing 1 unit of a good is the amount of the other good that must be
given up in order to produce that unit. In this case, we can calculate the opportunity cost of
producing 1 unit of bread (B) and 1 unit of apples (A) for both Elizabeth and Brian.

For Elizabeth:
 Opportunity cost of 1 unit of bread (B) = 20 units of apples (A) / 10 units of bread (B) = 2
units of apples (A) per unit of bread (B)
 Opportunity cost of 1 unit of apples (A) = 10 units of bread (B) / 20 units of apples (A) = 0.5
units of bread (B) per unit of apples (A)

For Brian:

 Opportunity cost of 1 unit of bread (B) = 10 units of apples (A) / 5 units of bread (B) = 2 units
of apples (A) per unit of bread (B)
 Opportunity cost of 1 unit of apples (A) = 15 units of bread (B) / 30 units of apples (A) = 0.5
units of bread (B) per unit of apples (A)

Conclusion:
So, for both Elizabeth and Brian, the opportunity cost of producing 1 unit of bread is 2 units of
apples, and the opportunity cost of producing 1 unit of apples is 0.5 units of bread.

2. Who has the comparative advantage and therefore specialize in producing bread? Why?
The opportunity cost for Elizabeth to produce 1 unit of bread is 1 apple, while for Brian it's 2
apples. This means Elizabeth has a lower opportunity cost for producing bread, indicating that
she has a comparative advantage in producing bread.

So, Elizabeth should specialize in producing bread because she can do so at a lower opportunity
cost (1 apple) compared to Brian (2 apples). Brian, on the other hand, might want to focus on
producing apples where he also has a comparative advantage.

Elizabeth has the comparative advantage in producing bread.

To determine this, let's look at the opportunity costs:
- For Elizabeth, the opportunity cost of producing 1 unit of bread is 1 apple.
- For Brian, the opportunity cost of producing 1 unit of bread is 3 apples.
 Comparing these opportunity costs, we see that Elizabeth has a lower opportunity cost for
producing bread. She only has to give up 1 apple to produce 1 unit of bread, while Brian has to
give up 3 apples for the same amount.
Therefore, Elizabeth should specialize in producing bread, as she can do so at a lower
opportunity cost compared to Brian. Brian, on the other hand, should specialize in producing
apples, as he has a comparative advantage in producing them.

3. Who has the comparative advantage and therefore should specialize in producing apple? Why?

Brian has the comparative advantage in producing apples.

To determine this, let's look at the opportunity costs:

- For Elizabeth, the opportunity cost of producing 1 unit of apples is 0.5 units of bread.

- For Brian, the opportunity cost of producing 1 unit of apples is 2 units of bread.

Comparing these opportunity costs, we see that Elizabeth has a lower opportunity cost for
producing apples. She only has to give up 0.5 units of bread to produce 1 unit of apples, while
Brian has to give up 2 units of bread for the same amount.

Therefore, Elizabeth should specialize in producing apples, as she can do so at a lower

opportunity cost compared to Brian. Brian, on the other hand, should specialize in producing
bread, as he has a comparative advantage in producing it.

NOTE NOT FINAL PA NEED E RECOMPUTE BALIK KAY ANG UNITS GIGAMIT IS LAHI SA SAMPLE NI MS PAG
LAST.