Hubert and Kate are farmers. Each one owns a 20-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 (BUSHELS PER ACRE) Alfalfa (BUSHELS PER ACRE) Hubert 40 8 Kate 28 7
Hubert and Kate are farmers. Each one owns a 20-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 (BUSHELS PER ACRE) Alfalfa (BUSHELS PER ACRE) Hubert 40 8 Kate 28 7
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Hubert and Kate are farmers. Each one owns a 20-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 (BUSHELS PER ACRE)
|
Alfalfa (BUSHELS PER ACRE)
|
|---|---|---|
| Hubert | 40 | 8 |
| Kate | 28 | 7 |
Transcribed Image Text:**Comparative Advantage without Trade: Educational Overview**
In this module, we explore the concept of comparative advantage using production possibilities frontiers (PPFs). The graph provides a visual representation of the PPFs for two individuals, Hubert and Kalani.
### Graph Explanation
The graph is a two-dimensional plot displaying the production possibilities for two goods: barley and alfalfa. The x-axis represents the quantity of barley (in bushels), while the y-axis represents the quantity of alfalfa (in bushels).
- **Blue Line (Circle Symbol):** Represents Hubert's PPF, showing the maximum combination of barley and alfalfa that Hubert can produce. This line illustrates Hubert's production capacity and efficiency.
- **Purple Line (Diamond Symbol):** Represents Kalani's PPF, indicating the maximum combination of barley and alfalfa that Kalani can produce. This line reveals Kalani's potential production capability.
Each point on these lines demonstrates a different possible allocation of resources between the two products and highlights the opportunity costs associated with choosing to produce more of one product over the other.
### Key Concept
The ability to produce a good at a lower opportunity cost than another producer is termed as **comparative advantage**. In this graph, we determine which individual has a comparative advantage in producing barley and which has it in producing alfalfa, based on the slopes and positions of their respective PPFs.
Understanding these concepts is crucial for analyzing how trade can benefit different producers by allowing them to specialize in the production of goods where they hold a comparative advantage.
![Certainly! Below is a transcription of the text from the image, designed for an educational website:
---
**Title: Understanding Comparative Advantage**
In the context of trade and economics, the concept of comparative advantage is crucial for understanding how different parties can benefit from specializing in the production of certain goods.
1. **Absolute Advantage in Production**:
- **France** has an absolute advantage in the production of textiles.
- **Germany** has an absolute advantage in the production of wine.
2. **Opportunity Cost Analysis**:
- **France's opportunity cost** of producing 1 bushel of wine is **[text missing]** bushels of textiles.
- **Germany's opportunity cost** of producing 1 bushel of textiles is **[text missing]** bushels of wine.
3. **Comparative Advantage**:
- **France** should specialize and export textiles, and **Germany** should specialize and export wine, based on their opportunity costs.
---
This example illustrates the fundamental economic principle that even if one country does not have an absolute advantage in any good, they can still benefit from trade by specializing in goods for which they have a comparative advantage.
**Note**: The text above includes areas where specific numbers were missing in the original image. Further details can be provided with more data.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F77e1d9fd-7c83-4490-b32c-691ac03d78a1%2F363d963e-2315-44ea-a31e-b11792692f89%2Fwt1nea_processed.png&w=3840&q=75)
Transcribed Image Text:Certainly! Below is a transcription of the text from the image, designed for an educational website:
---
**Title: Understanding Comparative Advantage**
In the context of trade and economics, the concept of comparative advantage is crucial for understanding how different parties can benefit from specializing in the production of certain goods.
1. **Absolute Advantage in Production**:
- **France** has an absolute advantage in the production of textiles.
- **Germany** has an absolute advantage in the production of wine.
2. **Opportunity Cost Analysis**:
- **France's opportunity cost** of producing 1 bushel of wine is **[text missing]** bushels of textiles.
- **Germany's opportunity cost** of producing 1 bushel of textiles is **[text missing]** bushels of wine.
3. **Comparative Advantage**:
- **France** should specialize and export textiles, and **Germany** should specialize and export wine, based on their opportunity costs.
---
This example illustrates the fundamental economic principle that even if one country does not have an absolute advantage in any good, they can still benefit from trade by specializing in goods for which they have a comparative advantage.
**Note**: The text above includes areas where specific numbers were missing in the original image. Further details can be provided with more data.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education