Question

2. Comparative and absolute advantage

Shen and Valerie are farmers. Each one owns a 12-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)	Alfalfa (Bushels per acre)
Shen	18	6
Valerie	28	7

On the following graph, use the blue line (circle symbol) to plot Shen's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Valerie's PPF.

_______  has an absolute advantage in the production of barley, and _______ has an absolute advantage in the production of alfalfa.

Shen's opportunity cost of producing 1 bushel of alfalfa is _______ bushels of barley, whereas Valerie's opportunity cost of producing 1 bushel of alfalfa is _______ bushels of barley. Because Shen has a _______  opportunity cost of producing alfalfa than Valerie, _______ has a comparative advantage in the production of alfalfa, and _______  has a comparative advantage in the production of barley.

Answer 1

Shen and Valerie are farmers. Each one owns a 12 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 Valerie has an absolute in the production of barley, and Valerie has an absolute advantage in the production of alfalfa Shen�s opportunity cost of producing 1 bushel of alfalfa is 3 bushels of barley, whereas Valerie�s opportunity cost of producing 1 bushel of alfalfa is 4 bushels of barley Because Shen has a lower opportunity cost of producing alfalfa than Valarie in the production of barley