申論題

2. Mary can make 40 cakes or 40 donuts per hours and Kevin can make 6 cakes or 30 donuts per hour. Both of their PPFs are straight lines, and each works for one hour. Suppose every consumer likes to buy 1 cake together with 1 donut.

(c) Suppose that they finally agree to trade at the ratio that 1 cake equals 2 donuts. How will Mary produce and trade？