Nebrask Virginia

Wheat 12 15

Cotton 6 10

For the next nine questions, refer to the table above. Nebraska and Virginia each have 100 acres of farmland. The table gives the hypothetical figures for yield per acre in the two states.

Who had the absolute advantage in the production of wheat?

a) Nebraska

b) Virginia

c) Both of the above

d) none of the above

Who has the absolute advantage in the production of cotton?

a) Nebraska

b) Virginia

c) Both of the above

d) none of the above

Who has the comparative advantage in the production of wheat?

a) Nebraska

b) Virginia

c) Both of the above

d) none of the above

Who has the comparative advantage in the production of cotton?

a) Nebraska

b) Virginia

c) Both of the above

d) none of the above

For the next four problems, you will find actual points on the combined PPC of the two states. You will be given a value of one good and you must calculate the maximum amount of the other good that that the two states could be producing together.

Wheat Cotton

360 xxxx

xxx 200

xxx 1300

1500 xxx

360 Wheat

a)1160 cotton

b)1280 cotton

c)1420 cotton

d)1600 cotton

e)none of these

200 cotton

a)1400 wheat

b)1600 wheat

c) 1800 wheat

d) 2000 wheat

e) none of these

1300 Cotton

a) 500 wheat

b) 600 wheat

c) 700 wheat

d) 800 wheat

e) none of the above

1500 wheat

a) 500 cotton

b) 600 cotton

c) 700 cotton

d) 800 cotton

e) none of the above

In Virginia, what is the marginal rate of transportation between wheat and cotton? Assume wheat is graphed on the vertical axis

a) -0.5

b) -1

c) -1.5

d) -2