Question

2. Comparative and absolute advantage 

Kenji and Lucia are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. 

	Corn (Bushels per acre)	Rye (Bushels per acre)
Kenji	20	4
Lucia	28	7

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

has an absolute advantage in the production of corn, and has an absolute advantage in the production of rye. 

Kenji's opportunity cost of producing 1 bushel of rye is bushels of corn, whereas Lucia's opportunity cost of producing 1 bushel of rye is bushels of corn. Because Kenji has a opportunity cost of producing rye than Lucia, has a comparative advantage in the production of rye, and has a comparative advantage in the production of corn.

Answer 1