Question

2. Comparative and absolute advantage

Eric and Ginny 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)
Eric	40	8
Ginny	28	7

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

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

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

Answer 1