Devon’s Total Production Of Milk

Devon’s total production of milk Devon’s total productio­­­­­n of ice cream Ravi’s total production of milk Ravi’s total production of ice cream
Devote all time to producing

Milk

80 pints of milk 0 pints of ice cream 175 pints of milk 0 pints of ice cream
Devote all time to producing ice cream 0 pints of milk 20 pints of ice cream 0 pints of milk 25 pints of ice cream

Note: Assume that both Devon and Ravi can produce any corresponding linear combination of milk and ice cream.

Consider Devon’s production of milk and ice cream

  1. What is Devon’s opportunity cost of producing a pint of ice cream?
  2. What is Devon’s opportunity cost of producing a pint of milk?
  3. What is Ravi’ opportunity cost of producing a pint of ice cream?
  4. What is Ravi’ opportunity cost of producing a pint of milk?
  5. Who has the absolute advantage in the production of milk?
  6. Who has the absolute advantage in the production of ice cream?
  7. Who has the comparative advantage in the production of milk?
  8. Who has the comparative advantage in the production of ice cream? (Please provide a brief explanation.)
  9. If both want to consume a strictly positive amount of both milk and ice cream: Who will trade milk for ice cream? (i.e. Who will give up milk in exchange for ice cream?)
  10. If both want to consume a strictly positive amount of both milk and ice cream: Who will trade ice cream for milk? (i.e. Who will give up ice cream in exchange for milk?)
  11. How much milk and ice cream will be produced if both Ravi and Devon completely specialize in the production of the product in which he has a comparative advantage?