2. Comparative and absolute advantage Carlos and Deborah are farmers. Each one owns a 12-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)
Carlos 12 3
Deborah 15 5
On the following graph, use the blue line (circle symbol) to plot Carlos's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Deborah's PPF.
Carlos's PPF
Deborah's PPF
0
60
120
180
240
300
360
420
480
540
600
120
108
96
84
72
60
48
36
24
12
0
RYE (Bushels)
CORN (Bushels)
has an absolute advantage in the production of corn, and has an absolute advantage in the production of rye.
Carlos's opportunity cost of producing 1 bushel of rye is
bushels of corn, whereas Deborah's opportunity cost of producing 1 bushel of rye is
bushels of corn. Because Carlos has a opportunity cost of producing rye than Deborah, has a comparative advantage in the production of rye, and has a comparative advantage in the production of corn.