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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
2. Comparative and absolute advantage
Dmitri and Frances are farmers. Each one owns a 12-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 Dmitri's production possibilities frontier
(PPF), and use the purple line (diamond symbol) to plot Frances's PPF. (Frances or Dmitri) has an absolute advantage in the production of alfalfa, and (Frances or Dmitri)
has an absolute advantage in the production of barley.
Dmitri's opportunity cost of producing 1 bushel of barley is bushels of alfalfa, whereas Frances's opportunity cost of producing 1 bushel of barley is bushels of alfalfa. Because Dmitri has a (Higher or lower) opportunity cost of producing barley than
Frances, (Frances or Dmitri) has a comparative advantage in the production of barley, and (Frances or
Dmitri) has a comparative advantage in the production of alfalfa.
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