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I thank anyone who answers in advance.

I am taking a beginner microeconomics course and I am stuck on a question. I understand all the parts but the question they are asking is slightly different than all of the examples in the text, video, and examples I have seen from a Google search.

I will put the question here and hope someone can help me.

  1. There are two parts: a. Find the missing values for Combined PPF (Equal Quantities). b. Find the missing values for Combined PPF (Specialization).

  2. The specialization part, I have been spinning my gears.

The following table shows production possibilities for Billy and Dale at the data required to answer the two questions at the bottom. I think I have the answer to question 1a correct. But the 1b, 'Combined PPF (Specialization)' I don't get it.

The following table shows production possibilities for Bily and Dale.

Billy Production Per Day Dale's Production Per Day
Cupcakes Muffins Cupcakes Muffins
0 12 0 16
1 9 1 12
2 6 2 8
3 3 3 4
4 0 4 0

Fill in the table below as follows

a. The first 2 columns represent joint production where Billy and Dale produce equal quantities.

b. The last 2 columns represent joint production where they each produce according to their comparative advantage (specialization).

Combined PPF (Equal quantities) Combined PPF (Specialization)
Cupcakes Muffins Cupcakes Muffins
0 28 0 ?
1 21 2 ?
2 14 4 ?
3 7 6 ?
4 0 8 ?

c. Plot the combined production possibility curves for both cases (equal quantities & specialization), with cupcakes on the horizontal axis, on the same graph).

I was able to piece together a graph but I am still unsure if it's correct. It look right, but I am second guessing myself.

enter image description here

Any help or a point in the right direction would truly help.

Thank you. Aaron

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1 Answer 1

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It looks like your table is incorrect. Dale has to give up 4 muffins to make a cupcake. Billy has to give up 3 muffins to make a cupcake. Therefore, Billy has the comparative advantage in cupcakes (it "costs" him less to produce them) and Dale has the comparative advantage in muffins.

1a. If they don't specialize, you simply add their production tables to see what is possible. For instance, if they both only produce cupcakes, they can produce 4+4=8. If they both only produce muffins, they can produce 16+12=28.

1b. If they do specialize, Billy will make as many cupcakes as possible, and Dale will make as many muffins as possible. If they make 0 cupcakes, they can make 28 muffins. If they want two cupcakes, Billy will make them and still make 6 muffins, resulting in 6+16=24 muffins. If they want 6 cupcakes, Billy will make 4, Dale will make 2 and still be able to make 8 muffins. And so on.

1c. When you plot your two charts, you'll find that specialization allows for at least as much production of each good at every point. The specialization chart should not be linear.

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  • $\begingroup$ Hey! Thank you! These early days in microeconomics have, this question in particular, has been causing my brain to hurt. So I appreciate your answer. My "ah-ha!" moment is about to hit. I can feel it. $\endgroup$ Apr 13, 2023 at 0:49
  • $\begingroup$ Thanks Aaron, if the answer is satisfactory go ahead and accept it, otherwise you may want to ask more specific questions about the parts that you are hung up on. Make sure you read the portion of the assigned text on PPF and comparative advantage as well. Stick with it and happy studying! $\endgroup$
    – A. Miller
    Apr 13, 2023 at 21:18

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