Question

Labour hours needed to make one pound of: Farmer Rancher Meat 10 5 Potatoes 1 For the rancher, the opportunity cost of one pound of meat is a. 5 pounds of meat b. 1 pound of meat c.0.2 pound of potatoes d. 5 pounds of potatoes 2 The farmer and rancher both could benefit by the farmer's specialising and the rancher's specialising in_ Select one: a meat, potatoes b. potatoes, meat c. neither good, meat d. They cannot benefit by specialisation and trade 3 The farmer has a comparative advantage _ in and the rancher has an absolute advantage in Select one: a both goods, neither good b. meat, both goods c. meat, neither good d. potatoes, neither good and the rancher has a 4 The farmer has an absolute advantage in comparative advantage in Select one: a meat, meat b. potatoes, potatoes c. neither good, potatoes d neither good, meat

Answer 1

Rancher solution: writing the table in the form of production of meat and potatoes per hour of labor : farmer Meat 110 115 Potatoes 114 111 - 1 1. for rancher opportunity cast of one found of meat - s = 5 beund of potatoes. 10 114 2. for farmer, ofbestunity cost of meat = 4 - 2.5 pound 4 pattes. for farmer, opportunity cost of betatoes = 'lo - 04 paid of mest for Rancher, opportunity rest of meat = 5 pound of potatoes. for Rancher, opportunity cast of patates = 15 = 0.2 pound of meat since opportunity cost of meat is less to farmer than rancher, farmer will specialize in meat and rancher will specialize in potatoes. 3. Farmer has comparative advantage in meat and the rancher has absolute adva 4. The has alasclute advantage in neither goods and rancher has comparative advantage in potatoes.