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Bob and Cho are farmers
Bob and Cho are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest.
| Corn | Rye | |
| (Bushels per acre) | (Bushels per acre) | |
| Bob | 20 | 4 |
| Cho | 28 | 7 |
a) Graph Bob and Cho's production possibilities frontier (PPF).
b) (Bob/Cho) has an absolute advantage in the production of corn, and (Bob/Cho) has an absolute advantage in the production of rye.
c) Bob's opportunity cost of producing 1 bushel of rye is (_____)bushels of corn, whereas Cho's opportunity cost of producing 1 bushel of rye is (_____) bushels of corn. Because Bob has a (higher/lower) opportunity cost of producing rye than Cho, (Cho/Bob) has a comparative advantage in the production of rye, and (Cho/Bob) has a comparative advantage in the production of corn.
Expert Solution
a) Bob and Cho's PPF are shown in the following diagram.
b) Cho has an absolute advantage in the production of corn, and Cho has an absolute advantage in the production of rye.
c) Bob's opportunity cost of producing 1 bushel of rye is 5 bushels of corn, whereas Cho's opportunity cost of producing 1 bushel of rye is 4 bushels of corn. Because Bob has a higher opportunity cost of producing rye than Cho, Cho has a comparative advantage in the production of rye, and Bob has a comparative advantage in the production of corn.
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