compad

compad - Practice Questions on Comparative Advantage. 1....

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Practice Questions on Comparative Advantage. 1. The small island nation of Ruritania is populated by two farmers, Alf and Barney. Each farmer has 100 acres. The land can be used either for growing wheat or as pasture for beef cattle. Alf's land is better than Barney's land. Each acre that Alf plants to wheat will yield 50 bushels of wheat per year. Each acre that Alf devotes to pasture will yield 70 pounds of beef per year. Each acre that Barney plants to wheat will yield 25 bushels of wheat per year and each acre that Barney devotes to pasture will yield 30 pounds of beef per year. (a) Alf's farm has absolute advantage in the production of beef and comparative advantage in the production of wheat. (b) Barney's farm has comparative advantage in the production of beef. (c) Barney's farm has comparative advantage in the production of wheat. (d) Alf's farm has comparative advantage in both beef and wheat. (e) More than one of the above statements is true. (Hint for Problem 2: to draw a national production possibility frontier for a country with 2 different kinds of producers, you must use the same technique described for drawing an international production possibility frontier for 2 countries such that all consumers within a country are identical. This technique is described in detail on pp 301-303 of your text.) 2. We can draw a national production possibility frontier for the island of Ruritania which shows the combinations of total amounts of beef and wheat that can produced when resources in Ruritania
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/25/2011 for the course ECON 1 taught by Professor Bergstrom during the Fall '07 term at UCSB.

Page1 / 3

compad - Practice Questions on Comparative Advantage. 1....

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online