Answered: Tim and Alyssa are farmers. Each one…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Tim and Alyssa 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)
Tim	20	4
Alyssa	28	7

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

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

Tim's opportunity cost of producing 1 bushel of barley is______ bushels of alfalfa, whereas Alyssa's opportunity cost of producing 1 bushel of barley is_____bushels of alfalfa. Because Tim has a _____ opportunity cost of producing barley than Alyssa, ____ has a comparative advantage in the production of barley, and ____ has a comparative advantage in the production of alfalfa.

200
180
Tim's PPF
180
140
120
Alyssa's PPF
100
80
60
40
20
100
200
300
400
500
600
700
800
900
1000
ALFALFA (Bushels)
BARLEY (Bushels)

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