Good Morning: The following table describes the production possibilities of twoc

Question

Good Morning:

The following table describes the production possibilities of twocities in the country of Baseballia:

                   Pairs of RedSocks                          Pairs of White Socks
           per Worker perHour                        per Worker per Hour

Boston                    3                                                          3
Chicago                  2                                                          1

Without trade, what is the price of white socks (in terms of redsocks) in Boston? And, what is the price in Chicago?

Thank you.

Jeannette

Explanation / Answer

When worker produce white sock, they cant produce red sock. Tomaintain the cost, total price of red socks that a worker canproduce in hour must equal to the total price of white socks that aworker can produce in an hour. In Boston, worker can produce 3 red socks/ 3 white socks perhour Price of white socks in = price of red socks in Boston is same. In Chicago, worker can produce 2 red socks or 1 white socks perhour. So, the price of white sock is double of the red socks.

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