Problem
Kim can produce 40 pies or 400 cakes an hour. Liam can produce 100 pies or 200 cakes an hour.
a. Calculate Kim's opportunity cost of a pie and Liam's opportunity cost of a pie.
b. If each spends 30 minutes of each hour producing pies and 30 minutes producing cakes, how many pies and cakes does each produce?
c. Who has a comparative advantage in producing (i) pies and (ii) cakes?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.