Question
Lorenzo and Neha are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer
Lorenzo and Neha are farmers. Each one owns a 12-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) | |
Lorenzo | 20 | 4 |
Neha | 28 | 7 |
On the following graph, use the blue line (circle symbol) to plot Lorenzo's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Neha's PPF.
Lorenzo's PPFNeha's PPF06012018024030036042048054060012010896847260483624120RYE (Bushels)CORN (Bushels)
has an absolute advantage in the production of corn, and has an absolute advantage in the production of rye.
Lorenzo's opportunity cost of producing 1 bushel of rye is
bushels of corn, whereas Neha's opportunity cost of producing 1 bushel of rye is
bushels of corn. Because Lorenzo has a opportunity cost of producing rye than Neha, has a comparative advantage in the production of rye, and has a comparative advantage in the production of corn.
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