Question

Carlos and Deborah 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.

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

[carlos or deborah] has an absolute advantage in the production of alfalfa, and [carlos or deborah]   has an absolute advantage in the production of barley.

Carlos's opportunity cost of producing 1 bushel of barley is [________________] bushels of alfalfa, whereas Deborah's opportunity cost of producing 1 bushel of barley is [____]
bushels of alfalfa. Because Carlos has a [Higher or lower] opportunity cost of producing barley than Deborah,[Carlos or Deborah] has a comparative advantage in the production of barley, and [Carlos or Deborah]has a comparative advantage in the production of alfalfa.

Answer 1

With using 20-acre plot of land : production possibilities of each farmer is shown below ;

	Alfalfa (bushels)	Barley (bushels)
Carlos	(20)(20)= 400	(4)(20)=80
Deborah	(28)(20) =560	(7)(20)=140

By plotting these points ,we get the PPF for both farmers as shown below :

Deborah has an absolute advantage in the production of alfalfa because he can produce more with the given resources And Deborah has an absolute advantage in the production of Barley because he can produce more with the given resources.

Carlo’ opportunity cost of producing 1 bushel of barley is 400/80= 5 bushels of alfalfa , whereas Deborah’s opportunity cost of producing 1 bushel of barley is 560/140= 4 bushels of alfalfa. Because Carlos has a higher opportunity cost of producing Barley than Deborah ,therefore Deborah has a comparative advantage in the production of barley and Carlos has a comparative advantage in the production of alfalfa.