ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Tim and Alyssa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest.

 

 
Alfalfa
Barley
(Bushels per acre)
(Bushels per acre)
Tim 20 4
Alyssa 28 7
 
On the following graph, use the blue line (circle symbol) to plot Tim's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Alyssa's PPF.
 
 
______   has an absolute advantage in the production of alfalfa, and_____  has an absolute advantage in the production of barley.
 
Tim's opportunity cost of producing 1 bushel of barley is______ bushels of alfalfa, whereas Alyssa's opportunity cost of producing 1 bushel of barley is_____bushels of alfalfa. Because Tim has a _____ opportunity cost of producing barley than Alyssa, ____   has a comparative advantage in the production of barley, and  ____  has a comparative advantage in the production of alfalfa.
200
180
Tim's PPF
180
140
120
Alyssa's PPF
100
80
60
40
20
100
200
300
400
500
600
700
800
900
1000
ALFALFA (Bushels)
BARLEY (Bushels)
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Transcribed Image Text:200 180 Tim's PPF 180 140 120 Alyssa's PPF 100 80 60 40 20 100 200 300 400 500 600 700 800 900 1000 ALFALFA (Bushels) BARLEY (Bushels)
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