1. (19 points) Assume Nebraska and Virginia each have 100 acres of farmland. hyp
ID: 1137690 • Letter: 1
Question
1. (19 points) Assume Nebraska and Virginia each have 100 acres of farmland. hypothetical figures for yield per acre in the two states: The following table gi Nebraska 14 15 Virginia Wheat Cotton A) (4 points) Who bas the ahsoltue sdvantage in the production of wheat?OP-Cof wheat for Nebras ka Ne braska: 1S/ Virgin i -Neb-foten s o:on on ket unib the absolute advantage in the production of cotton? of coton Who has the comparative advantage in the production of wheat? Nebraska ho hathe compmaive adranesge in prodcin n he roducion f otOPC-Neb-h B) (8 points) In this exercise, you will find actual points on the combined Production Possibilities Curve (PPC) of the two states. F the other good that the two countries could produce working together or each of the following values of one good, calculate the maximum amount of Wheat 630 Cotton 270 600 1500Explanation / Answer
B)
Nebraska has comparative advantage in producing wheat. So In order to produce 630 wheat, Nebraska will use 45 acre and produce wheat and with rest of 55 acrea Nebraska will produce Cotton and Also Virginia has comparative advantage in producing cotton and will use all 100 acre and produce cotton . So Total cotton produced is equal to = 55*15 + 100*3 = 1125.
Similarly In order to produce 270 cotton Virginia will use 90 acres So, witth remaining 10 acres Virginia will produce wheat and with 100 acres Nebraska will produce wheat. Hence Total Wheat produced is equal to 2*10 + 14*100 = 1420.
In order to produce 600 cotton Virginia will use 100 acres and Nebraska will use 20 acres So, with remaining 80 acres Nebraska will produce wheat. Hence Total Wheat produced is equal to 14*80 = 1120.
In order to produce 1500 wheat, Nebraska will use 100 acre and Virginia will use 50 acres and hence with the remaining 50 acreas Virginia will produce Cotton and hence total cotton produced = 50*3 = 150.
Wheat Cotton 630 1125 1420 270 1120 600 1500 150Related Questions
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