2. Comparative and absolute advantage Nick and Rosa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn Rye (Bushels per acre) (Bushels per acre) Nick 40 8 Rosa 28 7 On the following graph, use the blue line (circle symbol) to plot Nick's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Rosa's PPF. 200 180 Nick's PPF 160 140 120 Rosa's PPF 100 80 60 40 20 100 200 300 400 500 600 700 800 900 1000 CORN (Bushels) has an absolute advantage in the production of corn, and has an absolute advantage in the production of rye. Nick's opportunity cost of producing 1 bushel of rye is bushels of corn, whereas Rosa's opportunity cost of producing 1 bushel of rye is bushels of corn. Because Nick has a opportunity cost of producing rye than Rosa, has a comparative advantage in the production of rye, and has a comparative advantage in the production of corn. RYE (Bushels)
2. Comparative and absolute advantage Nick and Rosa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn Rye (Bushels per acre) (Bushels per acre) Nick 40 8 Rosa 28 7 On the following graph, use the blue line (circle symbol) to plot Nick's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Rosa's PPF. 200 180 Nick's PPF 160 140 120 Rosa's PPF 100 80 60 40 20 100 200 300 400 500 600 700 800 900 1000 CORN (Bushels) has an absolute advantage in the production of corn, and has an absolute advantage in the production of rye. Nick's opportunity cost of producing 1 bushel of rye is bushels of corn, whereas Rosa's opportunity cost of producing 1 bushel of rye is bushels of corn. Because Nick has a opportunity cost of producing rye than Rosa, has a comparative advantage in the production of rye, and has a comparative advantage in the production of corn. RYE (Bushels)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
Problem 6PA
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Transcribed Image Text:2. Comparative and absolute advantage
Nick and Rosa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per
year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the
rest.
Corn
Rye
(Bushels per acre)
(Bushels per acre)
Nick
40
8
Rosa
28
7
On the following graph, use the blue line (circle symbol) to plot Nick's production possibilities frontier (PPF), and use the purple line (diamond symbol)
to plot Rosa's PPF.
200
180
Nick's PPF
160
140
120
Rosa's PPF
100
80
60
40
20
100
200
300
400
500
600
700
800
900 1000
CORN (Bushels)
has an absolute advantage in the production of corn, and
has an absolute advantage in the production of rye.
Nick's opportunity cost of producing 1 bushel of rye is
bushels of corn, whereas Rosa's opportunity cost of producing 1 bushel of rye is
bushels of corn. Because Nick has a
opportunity cost of producing rye than Rosa,
has a comparative advantage in the
production of rye, and
has a comparative advantage in the production of corn.
RYE (Bushels)
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