Eric and Ginny are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of peppers and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing peppers or barley or to produce peppers on some of the land and barley on the rest. Peppers (Bushels per acre) Eric 20 Ginny 28 Barley (Bushels per acre) 4 7 On the following graph, use the blue line (circle symbol) to plot Eric's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Ginny's PPF. BARLEY (Bushels) 200 180 160 140 120 100 80 60 40 10 20 0 0 100 200 300 400 500 600 700 PEPPERS (Bushels) 800 900 1000 Ginny has an absolute advantage in the production of peppers, and Eric's PPF Ginny's PPF ? has an absolute advantage in the production of barley. Eric's opportunity cost of producing 1 bushel of barley is barley is bushels of peppers. Because Eric has a comparative advantage in the production of barley, and bushels of peppers, whereas Ginny's opportunity cost of producing 1 bushel of opportunity cost of producing barley than Ginny, has a has a comparative advantage in the production of peppers.

Eric and Ginny are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of peppers and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing peppers or barley or to produce peppers on some of the land and barley on the rest. Peppers (Bushels per acre) Eric 20 Ginny 28 Barley (Bushels per acre) 4 7 On the following graph, use the blue line (circle symbol) to plot Eric's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Ginny's PPF. BARLEY (Bushels) 200 180 160 140 120 100 80 60 40 10 20 0 0 100 200 300 400 500 600 700 PEPPERS (Bushels) 800 900 1000 Ginny has an absolute advantage in the production of peppers, and Eric's PPF Ginny's PPF ? has an absolute advantage in the production of barley. Eric's opportunity cost of producing 1 bushel of barley is barley is bushels of peppers. Because Eric has a comparative advantage in the production of barley, and bushels of peppers, whereas Ginny's opportunity cost of producing 1 bushel of opportunity cost of producing barley than Ginny, has a has a comparative advantage in the production of peppers.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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