Question

Assume that the farmer and the rancher can switch between producing pork and producing tomatoes at a constant rate. Assume that the farmer and the rancher each has 24 labor hours available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is_____________.

a. 4 pounds of pork and 8 pounds of tomatoes
b. 4 pounds of pork and 6 pounds of tomatoes
c. 6 pounds of pork and 8 pounds of tomatoes
d. 6 pounds of pork and 6 pounds of tomatoes

Answer 1

Answer:

C) 6 pounds of pork and 8 pounds of tomatoes

Explanation:

Explanation:

            Labor hours to make 1 lb. of:          lbs. produced in 24 hours

                 Pork                  Tomatoes              Pork            Tomatoes

Farmer         6                            3                       4                       8

Rancher       4                            4                       6                       6

If both decide to specialize in producing only one good, the farmer will produce 8 pounds of tomatoes per day and the rancher will produce 6 pounds of pork per day.

This way when the rancher trades 4 pounds of pork in exchange for 6 pounds of tomatoes, he is gaining 2 pounds of pork which is equivalent to 8 labor hours.

When the rancher trades 6 pounds of tomatoes in exchange for 4 pounds of pork, he is gaining 2 pounds of tomatoes which is equivalent to 6 labor hours.