Rachel’s opportunity costs of baking bread

1. Two friends, Rachel and Joey, enjoy baking bread and making apple pie. They are considering opening a bakery together. Rachel takes 2 hours to bake a loaf of bread and 1 hour to make a pie. Joey takes 4 hours to bake a loaf of bread and 4 hours to make a pie.

a. Draw production possibilities frontiers for Joey and Rachel.

b. What are Joey’s and Rachel’s opportunity costs of baking bread?

c. Who has the absolute advantage in making bread?

d. Who has the comparative advantage in making bread?

e. If Joey and Rachel both decide to open their bakery together and specialize to increase their joint production, what should Joey produce? What should Rachel produce?

f. Another option they’re considering is to each open separate bakeries. They could then either each split their time between making bread and pies, or they could each specialize and then trade with each other, so that their bakeries each offer both products. The price of a loaf of bread can be expressed in terms of an apple pie. If Joey and Rachel are specializing in production and decide to trade with each other, what range of ratios of bread and apple pie would allow both parties to benefit from trade?

g. They hire you as a business consultant and ask you to come up with a supplier agreement that makes them each equally better off. The question they ask you is to figure out how many pies and loaves of bread they should exchange with one another per day. (Think of a work day as being 8 hours long.)


2. Market surveys show that there are two types of consumers of avocado toast. The first type likes avocado toast and has a demand curve of

The second type is crazy about avocado toast and has a demand curve of

In the town of Pollakville, there are two consumers. Joel likes avocado toast, but Julia is crazy about avocado toast.

a. Plot Joel’s demand curve. Label axes and intercepts clearly.

b. Plot Julia’s demand curve. Label axes and intercepts clearly.

c. Using the individual demand curves above, derive the market demand for avocado toast in Pollakville. Plot the market demand curve. [HINT: Sum the two demand curves. Note that it may have two sections with different slopes.]

d. Suppose that the market supply for avocado toast in Pollakville is given by

Plot the supply curve on the same set of axes as the market demand curve.

e. Check your graph, then solve for the equilibrium price and quantity. How much does each consumer buy at the equilibrium?

f. Calculate the consumer surplus and show how you did so.

g. Calculate the producer surplus and show how you did so.

h. If the government imposes a $2 per unit tax on avocado toast, how will consumer surplus and producer surplus change? What is the tax revenue, and what is the size of the deadweight loss?

Get Professional Assignment Help Cheaply

fast coursework help

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Our essay writers are graduates with diplomas, bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.

Why Choose Our Academic Writing Service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

How It Works

1.      Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2.      Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3.      Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4.      Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.


order custom essay paper