Assume that Farmer Jan and Rancher Jean have the same amount of resources and identical technologies....
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Assume that Farmer Jan and Rancher Jean have the same amount of resources and identical technologies. Farmer Jan can produce 2 pounds of meat or 4 pounds of potatoes or any combination. Rancher Jean can produce 40 pounds of meat or 5 pounds of potatoes or any combination. (from Mankiw, 2nd Ed.) (a) (b) (c) (d) (e) Is this an input or an output problem? Explain how you know. Create a table showing the above data for each person and the opportunity costs. Show your math. Which person has an absolute advantage in the production of meat and which has an absolute advantage in the production of potatoes? Explain how you determined your answer. Which person has a comparative advantage in the production of meat and which has a comparative advantage in the production of potatoes? Explain how you determined your answer. Assume that the two people trade, and that one pound of potatoes is exchanged for three pounds of meat. Explain why the person who gets potatoes will gain from trade. Assume that Farmer Jan and Rancher Jean have the same amount of resources and identical technologies. Farmer Jan can produce 2 pounds of meat or 4 pounds of potatoes or any combination. Rancher Jean can produce 40 pounds of meat or 5 pounds of potatoes or any combination. (from Mankiw, 2nd Ed.) (a) (b) (c) (d) (e) Is this an input or an output problem? Explain how you know. Create a table showing the above data for each person and the opportunity costs. Show your math. Which person has an absolute advantage in the production of meat and which has an absolute advantage in the production of potatoes? Explain how you determined your answer. Which person has a comparative advantage in the production of meat and which has a comparative advantage in the production of potatoes? Explain how you determined your answer. Assume that the two people trade, and that one pound of potatoes is exchanged for three pounds of meat. Explain why the person who gets potatoes will gain from trade.
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Answer a This is a production problem because it involves determining the outputs that Farmer Jan and Rancher Jean can produce given their resources a... View the full answer
Related Book For
Understanding Business Statistics
ISBN: 978-1118145258
1st edition
Authors: Stacey Jones, Tim Bergquist, Ned Freed
Posted Date:
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