Practice | Homework B2
Due: Wednesday, Sept. 4 on Gradescope
Homework is designed to both test your knowledge and challenge you to apply familiar concepts in new applications. Answer clearly and completely use this sheet to show your work so you can later understand your thought process; you are welcomed and encouraged to work in groups as long as your work is your own. Submit your work on Gradescope when you're finished.
The Hogsmeade Candy Shop Saga
Honeydukes and Zonkos are two candy shops in Hogsmeade. Both shops make two types of popular candy, Chocolate Frogs (F) and Ice Mice (M). Honeydukes, devoting all their resources to either good, can make 100 pounds of F or 75 pounds of M. Zonkos can make 200 pounds of F or 100 pounds of M. Construct a Production Table and an Opportunity Cost Table in the space below to keep track of your work as you move through the questions.
Q1. Absolute Advantages
Which shop has the absolute advantage in Chocolate Frogs?
Which shop has the absolute advantage in Ice Mice?
Q2. Honeydukes' Opportunity Costs
What is Honeydukes' opportunity cost of 1 pound of Chocolate Frogs?
What is Honeydukes' opportunity cost of 1 pound of Ice Mice?
Q3. Zonko's Opportunity Costs
What is Zonko's opportunity cost of 1 pound of Chocolate Frogs?
What is Zonko's opportunity cost of 1 pound of Ice Mice?
Q4. Comparative Advantage
Which shop has the comparative advantage in Chocolate Frogs?
Which shop has the comparative advantage in Ice Mice?
Q5. Attainability
Zonko's investors at Gringots bank asked the candymaker to produce a total of 100F and 100M. With Zonkos' current technology and labor, is this level of production attainable?
Q6. Changes in Labor and Technology
Gringots decides to fund Zonko's purchase of a more capable Ice Mice machine, doubling Zonkos Ice Mice production. At the same time Honeydukes triples their labor hours, tripling their productive capacity. Construct an updated Production Table and Opportunity Cost Table in the space below to help in answering the following questions.
After the change in technology and labor:
Which shop has the absolute advantage in Chocolate Frogs?
Which shop has the absolute advantage in Ice Mice?
What is Honeydukes' opportunity cost of 1 pound of Chocolate Frogs?
What is Honeydukes' opportunity cost of 1 pound of Ice Mice?
What is Zonko's opportunity cost of 1 pound of Chocolate Frogs?
What is Zonko's opportunity cost of 1 pound of Ice Mice?
Which shop has the comparative advantage in Chocolate Frogs?
Which shop has the comparative advantage in Ice Mice?