1.

Michael's opportunity cost of paintings is 2 sculptures per 1 painting.

Angelo's opportunity cost of paintings is 3 sculptures per 1 painting

Michael has a CA at paintings

Michael should specialize at paintings and trade away paintings to receive sculptures

Angelo should specialize at sculptures and trade away sculptures to receive paintings

2.  Even if I have an absolute advantage at typing questions compared to my secretary or a student worker.  I, hopefully, have a comparative advantage at helping students learn economics.  Therefore, CA suggests that I should not type and I should spend my time working on economics.

3.  It is best to think of this problem in common units of time.  For my answer, I will explore how much can be produced in 4 hours

           Amount of Bread in 4 hours  Amount of Pie in 4 hour 

Becky                    2                                     4

Jesse                    1                                     1

Becky's OC of baking bread = 2 pies per 1 loaf

Jesse's OC of baking bead  = 1 pie per 1 loaf

Becky has an absolute advantage at baking bread

Jesses has a comparative advantage at baking bread

Jesses should specialize at producing bread and Becky's should specialize at producing pies

The trade price must lie between the two opportunity costs.

4.     a.   True; two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. All that is necessary is that each country have a comparative advantage in some good.

b.   False; it is not true that some people have a comparative advantage in everything they do. In fact, no one can have a comparative advantage in everything. Comparative advantage reflects the opportunity cost of one good or activity in terms of another. If you have a comparative advantage in one thing, you must have a comparative disadvantage in the other thing.

c.    False; it is not true that if a trade is good for one person, it cannot be good for the other one. Trades can and do benefit both sides¾especially trades based on comparative advantage. If both sides did not benefit, trades would never occur.

d.   False; trade that makes the country better off can harm certain individuals in the country. For example, suppose a country has a comparative advantage in producing wheat and a comparative disadvantage in producing cars. Exporting wheat and importing cars will benefit the nation as a whole, as it will be able to consume more of all goods. However, the introduction of trade will likely be harmful to domestic auto workers and manufacturers.

5.  It must be or we would not make the trade.  While we may have an absolute advantage at producing both goods, we will only trade away the good that we have a CA at so that we may receive the good we do not have a CA at.  If we did not follow this rule, we would be harming our economy.  As in 4d, we should note that individual effects may not be the same as country-wide effects.