a) What is Crusoe’s opportunity cost of catching one fish? What is Friday’s? b) Who has an absolute advantage in catching fish? Who has a comparative advantage in catching fish? In which goods do Robinson and Friday specialize? c) Draw the production possibility frontiers for Robinson and Friday (coconuts on x-axis, fish on y-axis). What is the slope of these frontiers? How can it be interpreted economically?

| December 6, 2018

a) What is Crusoe’s opportunity cost of catching one fish? What is Friday’s?

b) Who has an absolute advantage in catching fish? Who has a comparative advantage in catching fish? In which goods do Robinson and Friday specialize?

c) Draw the production possibility frontiers for Robinson and Friday (coconuts on x-axis, fish on y-axis). What is the slope of these frontiers? How can it be interpreted economically?

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