ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Nick and Rosa are farmers. Each one owns a 20-acre plot of land. The following table shows the
amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer
chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of
the land and alfalfa on the rest.
Barley
(Bushels per acre) (Bushels per acre)
Alfalfa
Nick
10
5
Rosa
40
8
On the following graph, use the blue line (circle symbol) to plot Nick's production possibilities
frontier (PPF), and use the purple line (diamond symbol) to plot Rosa's PPF.
(?)
Nick's PPF
10
140
120
Rosa's PPF
180
40
20
180 200 300 40 sa0 a0 700 0 s00 1000
BARLEY (Bushela
* has an absolute advantage in the production of barley, and
has an absolute
advantage in the production of alfalfa.
Nick's opportunity cost of producing 1 bushel of alfalfa is
bushels of barley, whereas
bushels of barley. Because
* has a comparative
Rosa's opportunity cost of producing 1 bushel of alfalfa is
Nick has a
opportunity cost of producing alfalfa than Rosa,
advantage in the production of alfalfa, and
production of barley.
has a comparative advantage in the
(soysne VNIV
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Transcribed Image Text:Nick and Rosa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of the land and alfalfa on the rest. Barley (Bushels per acre) (Bushels per acre) Alfalfa Nick 10 5 Rosa 40 8 On the following graph, use the blue line (circle symbol) to plot Nick's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Rosa's PPF. (?) Nick's PPF 10 140 120 Rosa's PPF 180 40 20 180 200 300 40 sa0 a0 700 0 s00 1000 BARLEY (Bushela * has an absolute advantage in the production of barley, and has an absolute advantage in the production of alfalfa. Nick's opportunity cost of producing 1 bushel of alfalfa is bushels of barley, whereas bushels of barley. Because * has a comparative Rosa's opportunity cost of producing 1 bushel of alfalfa is Nick has a opportunity cost of producing alfalfa than Rosa, advantage in the production of alfalfa, and production of barley. has a comparative advantage in the (soysne VNIV
Expert Solution
Check Mark
Step 1

Absolute advantage implies that producer can produce a particular good or service in higher quantity as compared to other good or service with the given resources. 

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