Question

Kate and Sarah own a bakery together. The two figures illustrate the production possibilities available to them if they work at their bakery for 8h a day. Answer the question using these figures. Sarah Breads (loaves) Breads (loaves) 0 O 1 2 3 4 5 6 7 9 10 11 12 13 14 Cakes (units) i 2 3 4 5 6 7 8 9 10 11 12 13 14 Cakes (units) If Kate and Sarah both specialize in the good in which they have a comparative advantage, the total production of bread will be 4 loaves, and the total production of cake will be 9 units. total production of bread will be 16 loaves, and the total production of cake will be 17 units. O total production of bread will be 12 loaves, and the total production of cake will be 8 units total production of bread will be 8 loaves, and the total production of cake will be 8.5 units.

Answer 1

Answer:

Total production of bread will be 12 loaves, and the total production of cake will be 8 units

Explanation:

Firstly, let's calculate the comparative advantage of both Sarah and Kate. It is evident Sarah has absolute advantage over Kate. However, the difference is significantly lower when comparing cakes, rather then comparing their bread rates. It is evident the productivity would be maximized if Sarah produced just bread, and Kate produced just cakes. That means they would use their maximum capacity for those goods.

Therefore, the total daily production of bread would be 12 loaves (Sarah's capacity), while the total daily production of cake would be 8 units (Kate's capacity).