Rob and Leo have to write poems and knit quilts as part of a contest to win tickets to New York. The contest stipulates that the two people who have the most poems and quilts by the end of the day will each win a trip to New York. Rob and Leo think that they can probably have the best shot at winning if they specialize and then trade one good for another. They know that Leo can write 11 poems in 20 minutes and knit 2 quilts in 100 minutes. Rob can write 5 poems in 10 minutes and knit 3 quilts in 160 minutes. Please answer the following questions using this information:
1. What would the price of 1 quilt be in terms of poems?
2. Who has the comparative advantage in which task? Who must specialize in what task? (Hint: use comparative advantage in your answer).
3. Who has the absolute advantage in which well? Illustrate your answer by showing both Leo’s production possibilities frontier and Rob’s production possibilities frontier.