Eric and Ginny are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of the land and alfalfa on the rest. Barley Alfalfa (Bushels per acre) (Bushels per acre) Eric 40 8 Ginny 28 7 ? has an absolute advantage in the production of barley, and has an absolute advantage in the production of alfalfa. Eric's opportunity cost of producing 1 bushel of alfalfa is ? bushels of barley, whereas Ginny's opportunity cost of producing 1 bushel of alfalfa is ? bushels of barley. Because Eric has a ? opportunity cost of producing alfalfa than Ginny, ? has a comparative advantage in the production of alfalfa, and ? has a comparative advantage in the production of barley.
Eric and Ginny are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of the land and alfalfa on the rest. Barley Alfalfa (Bushels per acre) (Bushels per acre) Eric 40 8 Ginny 28 7 ? has an absolute advantage in the production of barley, and has an absolute advantage in the production of alfalfa. Eric's opportunity cost of producing 1 bushel of alfalfa is ? bushels of barley, whereas Ginny's opportunity cost of producing 1 bushel of alfalfa is ? bushels of barley. Because Eric has a ? opportunity cost of producing alfalfa than Ginny, ? has a comparative advantage in the production of alfalfa, and ? has a comparative advantage in the production of barley.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Eric and Ginny are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of the land and alfalfa on the rest.
|
Barley
|
Alfalfa
|
|
|---|---|---|
|
(Bushels per acre)
|
(Bushels per acre)
|
|
| Eric | 40 | 8 |
| Ginny | 28 | 7 |
? has an absolute advantage in the production of barley, and has an absolute advantage in the production of alfalfa.
Eric's opportunity cost of producing 1 bushel of alfalfa is ?
bushels of barley, whereas Ginny's opportunity cost of producing 1 bushel of alfalfa is ? bushels of barley. Because Eric has a ? opportunity cost of producing alfalfa than Ginny, ? has a comparative advantage in the production of alfalfa, and ? has a comparative advantage in the production of barley.
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