Frank the farmer and Ron the rancher each work 8 hours per day. It takes Frank 60 minutes to produce 1 kg meat, and 15 minutes to produce 1 kg potatoes. It takes Ron 20 minutes to produce 1 kg meat, and 10 minutes to produce 1 kg potatoes.
Draw the daily PPFs for Frank and Ron.
What is Frank’s opportunity cost of producing 1 kg meat? What is Frank’s opportunity cost of producing 1 kg potatoes?
What is Ron’s opportunity cost of producing 1 kg meat? What is Ron’s opportunity cost of producing 1 kg potatoes?
Who has a comparative advantage in producing meat? Who has a comparative advantage in producing potatoes?
Frank and Ron decide to trade with each other, who will trade away meat in exchange for potatoes? Who will trade away potatoes in exchange for meat?
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