Fedoras (F)
Very Very Bad-inators (B)
Perry
6/hr
4/hr
Dr. Doofenshmirtz
2/hr
10/hr




Graph the production possibilities frontier per hour for both Perry’s and Dr. Doofenshmirtz’s. (4 points)

Perry’s PPF

Dr. Doofenshmirtz’s PPF








Based on production per hour calculated in b., determine per unit opportunity costs of producing Fedoras and Bad-inators. Show your calculations for both Perry’s and Dr. Doofenshmirtz’s.




Who has comparative advantage in F? (1 point)


Determine a price range that is suitable for trade for both Fedoras and Bad-inators. (4 points)

Price range for Fedoras: 1F = ( , )

Price range for Bad-inators: 1 B = ( , )


If the trade price is 1F = 1B do both Perry and Dr. Doofenshmirtz gain from trade? Why?
(4 points)


Determine the new consumption possibilities frontier (CPF) with trade at the trade price of 1F = 1S for both Perry’s and Dr. Doofenshmirtz’s. Show the area of gains from trade in your graphs if it exists. (6 points)