Karen George

Burgers Burgers

50

30 30

10

10 25 Cookies 40 60 Cookies
(dozens) (dozens)

Step 1: Max Poss Max Poss Opp Cost Opp Cost Special-
Output of Output of Of Making Of Making ization
Burgers Cookies Burgers Cookies
Karen
George

Step 2: Total Product Total Product Gains from

Before Specializ. After Specializ. Specialization
Burgers
Cookies

Step 3: Total Consumption One/half Gains from Total Consumption

Before Specialization Specialization After Specialization
Burgers Cookies Burgers Cookies Burgers Cookies
Karen
George

Step 4: Indicate the consumption point, after specialization, for each person on the
graphs above. Label each point C.

FORMULA:
Opportunity cost Max. possible output of the other good
of making one good = Max. possible output of the good you are
making
 Andorra Monaco
Music Music 150
Boxes Boxes
100

80
50

75 150 30 75
Watches Watches

Step 1: Max Poss Max Poss Opp Cost Opp Cost Special-
Output of Output of Of Making Of Making ization
M. Boxes Watches M Boxes Watches
Andorra
Monacco

Step 2: Total Product Total Product Gains from

Before Specializ. After Specializ. Specialization
Music Boxes
Watches

Step 3: Total Consumption One/half Gains from Total Consumption

Before Specialization Specialization After Specialization
M. Boxes Watches M. Boxes Watches M. Boxes Watches
Andorra
Monacco

Step 4: Indicate the consumption point, after specialization, for each country on the
graphs above. Label each point C.

FORMULA:
Opportunity cost Max. possible output of the other good
of making one good = Max. possible output of the good you are
making