Steve can bake either 4 loaves of bread or 8 dozen cookies a day. Sarah can bake either 4 loaves of bread or 4 dozen cookies a day.
a. Show the production possibilities frontiers for Steve and Sarah
b. Suppose trade is not allowed between Steve and Sarah and as a result, both Steve and Sarah spending half a day (12 hours) baking bread and the other half a day baking cookie. Show both the production and consumption bundles for Steve and Sarah on their respective PPFs, when trade is not allowed between Steve and Sarah.
c. Show, using production possibility frontiers in (a), that Steve and Sarah would be better off specializing in their baking activities and then trading, rather than baking only for themselves. Be specific and state the production and consumption bundles with trade

The production possibility frontier (PPF) of both Steve and Sarah per day is given in graph A.

Production and consumption bundle of Steve and Sarah on their respective PPF when trade is not allowed is given in graph B

Consumption of steve:

2 Loaves of bread and 6 cookies

Consumption of sarah:

2 Loaves of bread and 2 cookies

The opportunity cost of baking bread for steve:

4 Bread = 12 cookies

4 : 12

= 1 : 3

So,

1 Bread = 3 cookies

The opportunity cost of baking bread for Sarah:

4 Bread = 4 cookies

4 : 4

= 1 : 1

So,

1 Bread = 1 cookies

The opportunity cost of cookies for steve:

12 cookies = 4 Bread

3 cookies = 1 bread

1 cookie = 1/3 bread

The opportunity cost of cookies for Sarah:

4 cookies = 4Bread

1 cookies = 1 Bread

Therefore,

Steve has a comparative advantage in producing cookies while Sarah has a comparative advantage in producing bread

Before trade:

Total consumption = 4 Bread 8 cookies

After trade:

Total consumption = 4 Bread 12 cookies

In conclusion, the economy is better off

The production possibility frontier also known as the production possibility curve is the graphical representation of possible combination of goods that can be produced by a producer at a particular time with the available resources.

Learn more about production possibility frontier:

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Consider two neighboring island countries called Euphoria and Bellissima. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Country Rye Jeans (Bushels per hour of labor) (Pairs per hour of labor) Euphoria 4 16 Bellissima 6 12 Initially, suppose Bellissima uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans while Euphoria uses 3 million hours of labor per month to produce rye and 1 million hours per month to produce jeans. Consequently, Euphoria produces 12 million bushels of rye and 16 million pairs of jeans, and Bellissima produces 6 million bushels of rye and 36 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans it produces. Euphoria's opportunity cost of producing 1 bushel of rye is __(1/2, 1/4, 2, 4)___ pairs of jeans, and Bellissima's opportunity cost of producing 1 bushel of rye is __(1/2, 1/4, 2, 4)___ of jeans. Therefore, __(Euphoria or Bellissima)__ has a comparative advantage in the production of rye, and___ (Euphoria or Bellissima)__ has a comparative advantage in the production of jeans. Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces rye will produce____million bushels per month, and the country that produces jeans will produce____million pairs per month. In the following table, enter each country's production decision on the third row of the table (marked "Production"). Suppose the country that produces rye trades 14 million bushels of rye to the other country in exchange for 42 million pairs of jeans. In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and enter each country's final consumption of each good on the line marked "Consumption." When the two countries did not specialize, the total production of rye was 18 million bushels per month, and the total production of jeans was 52 million pairs per month. Because of specialization, the total production of rye has increased by____million bushels per month, and the total production of jeans has increased by____million pairs per month. Because the two countries produce more rye and more jeans under specialization, each country is able to gain from trade. Calculate the gains from trade—that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in consumption"). Euphoria Bellissima Rye Jeans Rye Jeans (Millions of bushels) (Millions of pairs) (Millions of bushels) (Millions of pairs) Without trade Production 12 16 6 36 Consumption 12 16 6 36 With trade Production ______ ______ ______ ______ Trade action (Export 14 or Import 14) (Export 42 or Import 42) (Export 14 or Import 14) (Export 42 or Import 42) Consumption _____ ______ _______ ________ Gains from trade Increase in consumption ________ _______ there should be two more answe spots under rye and jeans Also the rye and jeans should be over the numbers, I just messed up th table and cant shift it for some reason

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Account Title Debits Credits
Cash 22,700
Accounts receivable 330,000
Prepaid rent 13,000
Inventory 51,000
Office equipment 610,000
Accumulated depreciation—office equipment 254,000
Accounts payable 72,000
Note payable (due in six months) 63,000
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Interest payable 2,100
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Cost of goods sold 450,000
Salaries expense 112,500
Rent expense 39,000
Depreciation expense 61,000
Interest expense 4,200
Advertising expense 5,200
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1-b. Prepare a classified balance sheet as of December 31, 2018.
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Prepare an income statement for the year ended December 31, 2018.
BLUEBOY CHEESE CORPORATION
Income Statement
For the Year Ended December 31, 2018
0
0
0
$0
Prepare a classified balance sheet as of December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
BLUEBOY CHEESE CORPORATION
Balance Sheet
At December 31, 2018
0
0
$0
0
0
$0
Prepare the necessary closing entries at December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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Record the entry to close the income summary account.

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