Extra Credit Assignment #1: Please review the lectures on specialization and trade from Module #2. Suppose there are two producers Jerry and Daisy that produce two main products, cakes and biscuits. The table below shows the maximum quantity of each item, each producer can produce using all available resources in a given time period. Using this information, calculate the opportunity cost of producing 1 unit of each item in terms of the other item for each producer. #of cakes #of Biscuits
Jerry 1000 1600
Daisy 1200 1400
Calculate the opportunity costs: For Jerry: For Daisy: Which producpr should specialize in biscuits based upon the concept of comparative advantage and why?