I'm totally buttfucked baffled right now and I can't wrap my mind around why. I'm a little hung-over from last night, maybe you could take pity on me and help me in this very meager economics problem (trust me, it is pretty meager but I just can't think). Ok, say Kurt and Iggi make ice cream and waffle cones.
Iggie makes
24 ice cream scoops per hour and 8 cones per hour
Kurt makes 16 scoops per hour and 4 cones per hour
Iggie's cost for each is
1 cone = 3 ice cream scoops
1 ice cream scoops = .333 cones
Kurt is
1 cone = 4 ice cream scoops
1 scoop = . 25 cones.
Obviously iggie has the absolute advantage in both fields because he makes more per hour of both, but it costs Kurt less cones to make a scoop of ice cream so he has the comparative advantage.
what price of waffle cones in terms of ice cream scoops would make both wish to trade?
A = 2.75 ice cream per cone
B= 1 ice cream per cone
C= 3.25 ice cream per cone
D = 4.50 ice cream per cone
I don't know why I can't wrap my head around this right now, macro is my favorite subject. I'm thinking the answer is A but I feel like I'm over-looking something or I'm looking at the problem backwards.
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