The Maroon Truck has an absolute advantage in producing Fish. Absolute advantage refers to the ability to produce a good or service more efficiently or with a higher output per unit of input. In this case, the Maroon Truck can produce 10 Fish per minute, while the Gold Truck can only produce 4 Fish per minute. Therefore, the Maroon Truck can produce Fish at a faster rate, making it the clear choice for Fish production.
b. The Gold Truck has an absolute advantage in producing Chips. Similar to the concept of absolute advantage for Fish, the Gold Truck can produce 8 Chips per minute, whereas the Maroon Truck can only produce 5 Chips per minute. This means the Gold Truck is more efficient in producing Chips.
c. To determine comparative advantage, we need to calculate the opportunity cost of producing one unit of Fish for each truck. Opportunity cost is the value of the next best alternative foregone when a decision is made.
For the Maroon Truck, the opportunity cost of producing 1 Fish is giving up the production of (5/10) = 0.5 Chips since it can produce 10 Fish or 5 Chips in a minute.
For the Gold Truck, the opportunity cost of producing 1 Fish is giving up the production of (8/4) = 2 Chips since it can produce 4 Fish or 8 Chips in a minute.
Comparing the opportunity costs, the Maroon Truck has a lower opportunity cost (0.5 Chips) for producing 1 Fish compared to the Gold Truck (2 Chips). Therefore, the Maroon Truck has a comparative advantage in producing Fish.
d. Similarly, to determine comparative advantage for producing Chips, we calculate the opportunity cost of producing 1 Chip for each truck.
For the Maroon Truck, the opportunity cost of producing 1 Chip is giving up the production of (10/5) = 2 Fish.
For the Gold Truck, the opportunity cost of producing 1 Chip is giving up the production of (4/8) = 0.5 Fish.
Comparing the opportunity costs, the Gold Truck has a lower opportunity cost (0.5 Fish) for producing 1 Chip compared to the Maroon Truck (2 Fish). Therefore, the Gold Truck has a comparative advantage in producing Chips.
e. Without being able to trade, the Maroon Truck can produce Fish at a rate of 10 Fish per minute. With 30 minutes of available time, the Maroon Truck can produce a total of 30 minutes × 10 Fish per minute = 300 Fish and Chips combos.
f. Without being able to trade, the Gold Truck can produce Chips at a rate of 8 Chips per minute. With 30 minutes of available time, the Gold Truck can produce a total of 30 minutes × 8 Chips per minute = 240 Fish and Chips combos.
In summary, the Maroon Truck has an absolute advantage in producing Fish, while the Gold Truck has an absolute advantage in producing Chips. The Maroon Truck has a comparative advantage in producing Fish, and the Gold Truck has a comparative advantage in producing Chips. Without the ability to trade, the Maroon Truck can produce 300 combos, while the Gold Truck can produce 240 combos.
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