1. Consider a market of two farmers which are also consumers. The following table contains the maximum production levels over a time period of 8 hours for both wheat and wine. As usual, we assume linear production possibility frontiers. Wheat Wine 10kg 15kg Farmer Albert 21 11 Berta (a) Identify absolute advantages for each good. (b) Identify comparative advantage. (c) How does the comparative advantage change when calculated over 1 hour of production time? (d) How should Albert and Berta specialise? Who will trade what? (e) Given their production and consumption before trade, Production/Consumption | Wheat Wine Albert 5kg 7.5kg 11 Berta 0.51 Assume production changes to the following .

1. Consider a market of two farmers which are also consumers. The following table contains the maximum production levels over a time period of 8 hours for both wheat and wine. As usual, we assume linear production possibility frontiers. Wheat Wine 10kg 15kg Farmer Albert 21 11 Berta (a) Identify absolute advantages for each good. (b) Identify comparative advantage. (c) How does the comparative advantage change when calculated over 1 hour of production time? (d) How should Albert and Berta specialise? Who will trade what? (e) Given their production and consumption before trade, Production/Consumption | Wheat Wine Albert 5kg 7.5kg 11 Berta 0.51 Assume production changes to the following .

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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