Elif can produce 8 cakes or 80 cookies in 1 hour. Burak can produce 10 cakes or 20 cookies in 1 hour. a) Draw the PPF lines for Elif and Burak. b) If each spends 30 minutes of each hour for producing cakes and 30 minutes for producing cookies, how many cakes and cookies does each produce? c) What is the opportunity cost of producing cakes for Elif? What is the opportunity cost of producing cakes for Burak? d) What is the opportunity cost of producing cookies for Elif? What is the opportunity cost of producing cookies for Burak? e) Who has a comparative advantage in producing cakes and who has a comparative advantage in producing cookies? f) On the PPF lines, show what Elif produces and what Burak produces when they specialize. g) Suppose that they set the exchange price as 1 Cake
=5
Cookies. If they specialize and trade, show an exchange situation that is beneficial for both (compared to the situation you found in part (b))? 2- (10 pts) a. What are the factors that affect the supply of a good or service? b. What are the factors that affect the demand of a good or service? 3-