Van and Amy are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of their land and alfalfa on the rest.

Barley Alfalfa
Bushels per acre Bushels per acre
Van 40 8
Amy 28 7

(Amy, Van) has an absolute advantage in the production of barley, and (Amy, Van) has an absolute advantage in the production of alfalfa.

Van's opportunity cost of producing 1 bushel of alfalfa is (-------------------- )bushels of barley whereas Rina's opportunity cost of producing 1 bushel of alfalfa is (----------) bushels of barley. Because Van has a (higher, lower) opportunity cost of producing alfalfa than Amy, (Amy, Van) has a comparative advantage in the production of alfalfa, and (Amy, Van) has a comparative advantage in the production of barley

Van's opportunity cost of producing 1 bushel of alfalfa is 0.2 bushels of barley whereas Rina's opportunity cost of producing 1 bushel of alfalfa is 0.25 bushels of barley.

Because Van has a HIGHER opportunity cost of producing alfalfa than Amy, AMY has a comparative advantage in the production of alfalfa, and VAN has a comparative advantage in the production of barley

Explanation:

Barley Alfalfa

Bushels per acre Bushels per acre

Van 40 8

Amy 28 7

Van's opportunity cost of producing barley = 8 / 40 = 0.2 bushels of alfalfa

Van's opportunity cost of producing alfalfa = 40/ 8 = 5 bushels of barley

Amy's opportunity cost of producing barley = 7 / 28 = 0.25 bushels of alfalfa

Amy's opportunity cost of producing alfalfa = 28 / 7 = 4 bushels of barley

Opportunity costs are additional costs or any benefits lost from choosing one activity or investment over another alternative.

Palky Palky · Answer 2 · 2022-01-18T15:59:37+01:00

A] VAN has Absolute Advantage in both Alfalfa & Barley

B] VAN's Opportunity Cost of producing a unit Alfalfa = 0.2 units Barley ; AMY's Opportunity Cost of producing a unit Alfalfa = 0.25 units Barley

C] VAN has a LOWER Opportunity Cost of Alfalfa than AMY. So, VAN has Comparative advantage in producing Alfalfa ; & AMY has Comparative advantage in producing Barley.

Absolute Advantage

It is the capability of producing higher quantity of output, or with lesser quantity of input.
Van can produce more amounts of Barley & Alfalfa both (40 & 8), as compared to Amy can produce lesser of both (28 & 7), with same land input.

Comparative Advantage

It is the ability to produce with comparatively lesser opportunity cost (ie other goods) sacrifised.
Van can produce an Alfalfa by opportunity cost of 8 / 40 ie 0.2 units Barley sacrifised. It is lesser than Amy's Alfalfa opportunity cost, ie 7 / 28 = 0.25 units

`To learn more, refer https://brainly.com/question/7780461?referrer=searchResults