Question

Eric and Ginny 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)
Eric	20	4
Ginny	28	7

On the following graph, use the blue line (circle symbol) to plot Eric's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Ginny's PPF.

Eric's PPFGinny's PPF06012018024030036042048054060012010896847260483624120RYE (Bushels)CORN (Bushels)

  has an absolute advantage in the production of corn, and   has an absolute advantage in the production of rye.

Eric's opportunity cost of producing 1 bushel of rye is

bushels of corn, whereas Ginny's opportunity cost of producing 1 bushel of rye is

bushels of corn. Because Eric has a   opportunity cost of producing rye than Ginny,   has a comparative advantage in the production of rye, and   has a comparative advantage in the production of corn.

Answer 1

The PPF is the location of all such points that gives the combinations of two goods that the economy can produce using all its resources efficiently. The production for each product using 12 acres of land is given in the table below

Table 1

	Corn	Rye
	(Bushels)	(Bushels)
Eric	240	48
Ginny	336	84

The numbers on the table belong to respective PPF that gives the point where the PPF touch the axis. That is 240 bushels of corn can be produced when the producer is not producing rye. Then one point on E's PPF is (0,240). The PPFs are depicted below

Figure1