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. 2. Comparative and absolute advantage David and Morgan are...
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2. Comparative and absolute advantage David and Morgan are farmers. Each one owns a 14—acre plot of iand. The following table shows the amount of maize and squash each farmer can
produce per year on a given acre. Each farmer chooses whether to devote all acres to producing maize or squash or to produce maize on some of the iand and squash on the rest. Maize Squash (Pounds per acre) (Pounds per acre) David 18 6
Morgan 10 5
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On the following graph, use the blue line (circle symbol) to plot David's production possibilities frontier (PPF), and use the purple line (diamond
symbol) to plot Morgan's PPF.
140
O
126
David's PPF
112
98
84
Morgan's PPF
SQUASH (Pounds)
70
56
42
28
14
0
70
140 210 280 350 420 490 560 630 700
MAIZE (Pounds)
has an absolute advantage in the production of maize, and
has an absolute advantage in the production of squash.
David's opportunity cost of producing 1 pound of squash is
pounds of maize, whereas Morgan's opportunity cost of producing 1 pound of
squash is
pounds of maize. Because David has a
opportunity cost of producing squash than Morgan,
has a
comparative advantage in the production of squash, and
has a comparative advantage in the production of maize.
Answer & Explanation
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