Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Strictures Of Inheritance The Dutch Economy In The Nineteenth Century

Authors: Jan Luiten Van Zanden, Arthur Van Riel, Ian Cressie

1st Edition

0691229309, 9780691229300

More Books

Students also viewed these Economics questions

Question

What are the capabilities of an electronic news service?

Answered: 1 week ago

Question

What does this look like?

Answered: 1 week ago