Answered: ______ has an absolute advantage in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative and absolute advantage

Antonio and Caroline are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest.

	Alfalfa	Barley
(Bushels per acre)	(Bushels per acre)
Antonio	40	8
Caroline	28	7

On the following graph, use the blue line (circle symbol) to plot Antonio's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Caroline's PPF.

Antonio's PPFCaroline's PPF01002003004005006007008009001000200180160140120100806040200BARLEY (Bushels)ALFALFA (Bushels)

_______ has an absolute advantage in the production of alfalfa, and ______ has an absolute advantage in the production of barley.

Antonio's opportunity cost of producing 1 bushel of barley is

bushels of alfalfa, whereas Caroline's opportunity cost of producing 1 bushel of barley is

bushels of alfalfa. Because Antonio has a----- opportunity cost of producing barley than Caroline,_______ has a comparative advantage in the production of barley, and_______

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