Question

Below, you are provided with Esteban's and Irene's Production Possibilities Frontiers between chicken empanadas and beef empanadas. You will use these PPFs to identify the opportunity cost of producing an additional empanada of each type for both individuals, to determine which individual has an absolute advantage in the production of each type of empanada, and to determine which individual has a comparative advantage in the production of each type of empanada. Part 1: Complete the statement below. An individual or society that is more productive than another individual or society at producing a particular good is said to have an) (comparative, absolute) advantage in the production of that good. Part 2: Complete the statement below. An individual or society that can produce a specific good at a lower opportunity cost than another individual or society is said to have a(n) (comparative, absolute) advantage in the production of that good. PPFE depicts Esteban's PPF between chicken empanadas and beef empanadas, and PPF depicts Irene's PPF between chicken empanadas and beef empanadas. Both PPFs are linear, which implies that opportunity costs remain constant as you move along each PPF. 21 Beef Empanadas PPF 18 15 PPF 12 9 6 3 2 + 6 8 10 12 14 Chicken Empanadas

only answer parts 3-9!! thanks

Answer 1

	Beef empanadas	Chicken empanadas
Esteban	12	10
Irene	18	12

Part 3

Irene has an absolute advantage in the production of chicken empanadas as she can produce more quantity (12) than Esteban (10).

Irene has an absolute advantage in the production of beef empanadas as she can produce more quantity (18) than Esteban (12).

Irene has an absolute advantage since she can produce more quantity with the given resources than Esteban.

1. The opportunity cost of 1 beef empanandas in terms of chicken empanandas for Esteban is 10/12=0.83. Esteban has to give up 0.83 of chicken empanadas to produce one beef empanadas.

2. The opportunity cost of 1 beef empanandas in terms of chicken empanandas for Irene 12/18=0.67 is Irene has to give up 0.67 of chicken empanadas to produce one beef empanadas.

The opportunity cost for Irene is lower (0.67) than Esteban’s (0.83) so Irene has a comparative advantage in the production of beef empanadas.

3. The opportunity cost of 1 chicken empanandas in terms of beef empanandas for Esteban is 12/10=1.2. Esteban has to give up 1.2 beef empanadas to produce one chicken empanadas.

4. The opportunity cost of 1 chicken empanandas in terms of beef empanandas for Irene 18/12 = 1.5. Irene has to give up 1.5 beef empanadas to produce one chicken empanadas.

The opportunity cost for Esteban is lower (1.2) than Irene’s (1.5 so Esteban has a comparative advantage in the production of C chicken empanadas.

Part 4

1.2 beef empanadas.

The opportunity cost of 1 chicken empanandas in terms of beef empanandas for Esteban is 12/10=1.2. Esteban has to give up 1.2 beef empanadas to produce one chicken empanadas.

Part 5

1.5 beef empanadas.

The opportunity cost of 1 chicken empanandas in terms of beef empanandas for Irene 18/12 = 1.5. Irene has to give up 1.5 beef empanadas to produce one chicken empanadas.

Part 6

The opportunity cost for Esteban is lower (1.2) than Irene’s (1.5 so Esteban has a comparative advantage in the production of C chicken empanadas

Part 7

The opportunity cost of 1 beef empanandas in terms of chicken empanandas for Esteban is 10/12=0.83. Esteban has to give up 0.83 of chicken empanadas to produce one beef empanadas.

Part 8

The opportunity cost of 1 beef empanandas in terms of chicken empanandas for Irene 12/18=0.67 is Irene has to give up 0.67 of chicken empanadas to produce one beef empanadas.

Part 9

The opportunity cost for Irene is lower (0.67) than Esteban’s (0.83) so Irene has a comparative advantage in the production of beef empanadas.