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Cookies. Brownies. If both spend all day making cookies, we get 40 cookies and no brownies. When Lisa gives up one hour from making cookies, we lose 2 dozen cookies, but that gives us an extra 4 brownies. 40 0. 38 4. 36 8.

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  1. Cookies Brownies If both spend all day making cookies, we get 40 cookies and no brownies. When Lisa gives up one hour from making cookies, we lose 2 dozen cookies, but that gives us an extra 4 brownies 40 0 38 4 36 8 As she continues to spend an additional hour making brownies, she must give up an additional hour of making cookies. 34 12 32 16 30 20 28 24 26 28 Now, we’ve spent an entire day with Lisa spending 8 hours making brownies and Sara spending 8 hours making cookies. 24 32 21 37 18 42 15 47 12 52 9 57 6 62 Here, both people have spent their entire day baking brownies 3 67 0 72 • If we wanted to get some brownies, what is the best approach? • Either Sara or Lisa could make them, but we see that it’s cheaper for Lisa to make them. If we want any more brownies, now Sara has to start making them at a cost of 5 brownies for every 3 cookies.

  2. Opp. Cost: 1 Brownie = 1/2 cookie “Kink Point” - point at which both people are fully specialized Opp. Cost: 1 Brownie = 0.6 Cookie

  3. Specializing in producing the good you have a comparative advantage in Specializing in the “wrong” product

  4. Infeasible Inefficient but feasible

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