Question

Dmitri and Frances are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and corn on the rest.

	Rye	Corn
	(Bushels per acre)	(Bushels per acre)
Dmitri	30	10
Frances	28	7

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

Dmitri's opportunity cost of producing 1 bushel of corn is ----------------

bushels of rye, whereas Frances's opportunity cost of producing 1 bushel of corn is-----------------

bushels of rye. Because Dmitri has a ---- opportunity cost of producing corn than Frances, ----- has a comparative advantage in the production of corn, and --- has a comparative advantage in the production of rye.

Answer 1

	Rye	Corn
	(Bushels per acre)	(Bushels per acre)
Dmitri	30*20 = 600	10*20 = 200
Frances	28*20 = 560	7*20 = 140

The graph would look like as follows:-

Dmitri's opportunity cost of producing 1 bushel of corn is 30/10 =3 bushels of rye, whereas Frances's opportunity cost of producing 1 bushel of corn is 28/7 =4 bushels of rye. Because Dmitri has a lower opportunity cost of producing corn than Frances, Dmitri has a comparative advantage in the production of corn, and Frances has a comparative advantage in the production of rye.