Refer to the following table to answer the questions 58-60 Assume that the farme

Question

Refer to the following table to answer the questions 58-60 Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate. Labor Hours Needed to Make 1 Pound of Meat Pounds Produced in 24 Hours Potatoes Meat Farmer Rancher Potatoes 12 6 58. Assume that the farmer and the rancher each has 24 labor hours available. If each person divides his time equally between the production of meat and potatoes, then total production is a. 3 pounds of meat and 12 pounds of potatoes b. 5.5 pounds of meat and 8 pounds of potatoes. c. 8 pounds of meat and 4 pounds of potatoes. d. 11 pounds of meat and 16 pounds of potatoes. 59. Which of the following combinations of meat and potatoes could the farmer produce in 24 hours? a. 1 pound of meat and 8 pounds of potatoes. b. 2 pounds of meat and 5 pounds of potatocs c. 3 pounds of meat and 12 pounds of potatoes. d. 4 pounds of meat and 8 pounds of potatoes. 60. Who has the comparative advantage in producing potatoes? a. ranchers. b. farmers. c. Both ranchers and farmers. d. None of the above.

Explanation / Answer

58.

As it is visible from the table that there is 24 hour available to the farmers and ranchers. If each person divides his time equally in the production of meat and potatoes. It means farmers and ranchers produce in 12-hour meat and in next 12 hour potatoes.

In 24 hour farmer could produce = 3 pounds of meat.

In 12 hour farmer could produce = 3/2 pounds of meat.

In 12 hour farmer could produce = 1.5 pounds of meat.

In 24 hour farmer could produce = 12 pounds of tomatoes

In 12 hour farmer could produce =12/2 pounds of tomatoes

In 12 hour farmer could produce = 6 pounds of tomatoes

In 24 hour ranchers could produce = 8 pounds of meat.

In 12 hour ranchers could produce = 8/2 pounds of meat.

In 12 hour ranchers could produce = 4 pounds of meat.

In 24 hour ranchers could produce = 4 pounds of tomatoes

In 12 hour ranchers could produce =4/2 pounds of tomatoes

In 12 hour ranchers could produce = 2 pounds of tomatoes

Therefore the total production of meat will be =4+1.5

=5.5 pounds of meat

Therefore the total production of tomatoes will be =2+6

=8 pounds of tomatoes.

Therefore option b is the correct answer.

(59).

As it can be seen in the table that farmers can produce in 24 hours, the combination of meat and potatoes are;

3 pounds of meat and 12 pounds of potatoes.

Hence option c is the correct answer.

(60)

Opportunity cost can be defined as the production of output which is given up for producing some additional units of another output.

It is said that a person has a comparative advantage in the production of something if he can produce it at lower opportunity cost compare to someone else.

The opportunity cost of producing potatoes of farmer is = 3 pounds of meat / 12 pounds of potatoes

= 0.25 pounds of meats

The opportunity cost of producing potatoes of rancher is = 8 pounds of meat / 4 pounds of potatoes

= 2 pounds of meats

Since the opportunity cost of producing potatoes of the farmer is less than the opportunity cost of producing potatoes of the rancher. Therefore farmer has a comparative advantage in the production of potatoes.

Hence option b is the correct answer.

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