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1.
Cathy and Reid each own a 50acre plot of land.
Both can choose whether to
devote all 50 acres to producing sweet potatoes, all 50 acres to producing
asparagus, or produce sweet potatoes on some of their land and asparagus on the
rest.
Cathy can produce 10 bushels of sweet potatoes per acre each year, and she
can produce 5 bushels of asparagus per acre each year.
Reid can produce 12
bushels of sweet potatoes per acre each year, and he can produce 3 bushels of
asparagus per acre each year.
a.
(3 points) On the same graph, plot Cathy’s and Reid’s annual PPF.
Put
sweet potatoes on the yaxis and asparagus on the xaxis.
For each PPF,
label the xintercept, the yintercept and the slope.
b.
(2 points) Find the opportunity cost of producing sweet potatoes for Cathy
and Reid.
c.
(2 points) Find the opportunity cost of producing asparagus for Cathy and
Reid.
d.
(2 points) In which good does each have a comparative advantage?
e.
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 Spring '08
 TANG
 Microeconomics

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