Background information:

2. Comparative and absolute advantage Eric and Ginny are farmers. Each one owns a 20-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 10 5 Ginny 40 8On 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. 200 O 180 160 Eric's PPF 140 120 Ginny's PPF RYE (Bushels) 100 60 40 20 0 0 100 200 300 400 500 600 700 800 900 1000 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