2. Comparative and absolute advantage Gilberto and Juanita are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and com on the rest. Rye Corn (Bushels per acre) (Bushels per acre) Gilberto 12 Juanita 18 On the following graph, use the blue line (circle symbol) to plot Gilberto's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Juanita's PPF. 120 108 Gilberto's PPF 96 84 72 Juanita's PPF 60 48 36 24 12 60 120 180 240 300 360 420 480 540 600 RYE (Bushels) has an absolute advantage in the production of rye, and has an absolute advantage in the production of corn. Gilberto's opportunity cost of producing 1 bushel of corn is | bushels of rye. Because Gilberto has a |bushels of rye, whereas Juanita's opportunity cost of producing 1 bushel of corn is opportunity cost of producing corn than Juanita, has a comparative advantage in the production of corn, and has a comparative advantage in the production of rye. CORN (Bushels)

2. Comparative and absolute advantage Gilberto and Juanita are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and com on the rest. Rye Corn (Bushels per acre) (Bushels per acre) Gilberto 12 Juanita 18 On the following graph, use the blue line (circle symbol) to plot Gilberto's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Juanita's PPF. 120 108 Gilberto's PPF 96 84 72 Juanita's PPF 60 48 36 24 12 60 120 180 240 300 360 420 480 540 600 RYE (Bushels) has an absolute advantage in the production of rye, and has an absolute advantage in the production of corn. Gilberto's opportunity cost of producing 1 bushel of corn is | bushels of rye. Because Gilberto has a |bushels of rye, whereas Juanita's opportunity cost of producing 1 bushel of corn is opportunity cost of producing corn than Juanita, has a comparative advantage in the production of corn, and has a comparative advantage in the production of rye. CORN (Bushels)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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