Question

Jake and Latasha 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	Rye
	(Bushels per acre)	(Bushels per acre)
Jake	12	3
Latasha	15	5

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

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

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

Answer 1

Both farmer owns a 12-acre plot of land.

Jack can produce 12 bushels of corn per acre or 3 bushels of rye per acre.

So, in 12-acres, Jack can produce a maximum of 144 bushels of corn or 36 bushels of rye.

Latasha can produce 15 bushels of corn per acre or 5 bushels of rye per acre.

So, in 12-acres, Latasha can produce a maximum of 180 bushels of corn or 60 bushels of rye.

Following is the required figure -

120 108 96 84 72 60 36 24 Latasha's 12 Jake's PPF PPF 120 180 360 60 240 300 420 480 540 600 CORN (Bushels) 144 RYE (Bushels) 48

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

Jake's opportunity cost of producing 1 bushel of rye is (12/3) 4 bushels of corn, whereas Latasha's opportunity cost of producing 1 bushel of rye is (15/5) 3 bushels of corn.

Because Jake has a higher opportunity cost of producing rye than Latasha, Latasha has a comparative advantage in the production of rye, and Jake has a comparative advantage in the production of corn.