Question

Beth and Maria are two farmers with similar endowments of capital and labor, but their land differs in terms of productivity. Beth can produce 12 pounds of apples and 10 pounds of potatoes in a day, while Maria can produce 8 pounds of apples and 8 pounds of potatoes per day. According to the Ricardian theory, which of the following is true?
Group of answer choices
Beth has an absolute advantage in both apples and potatoes, but Maria has a comparative advantage in potatoes. So Beth should specialize in the production of apples, and exchange them for Maria’s potatoes.
Beth has an absolute advantage in both apples and potatoes, but Maria has a comparative advantage in apples. So Beth should specialize in the production of potatoes, and exchange them for Maria’s apples.
Beth has an absolute and a comparative advantage in both apples and potatoes, so Beth would be worse off if she specialized and traded with Maria.
Beth has an absolute advantage and a comparative advantage in apples, so Beth should specialize in the production of apples and exchange them for Maria’s potatoes.
Which sentence is incorrect about this production possibility frontier?
Group of answer choices
This economy can produce either 100 kilos of coal or 10 nuggets of gold per hour, but not both simultaneously.
Producing 90 kilos of coal and 9 nuggets of gold per hour is beyond this economy’s productive capacity.
This economy can choose to produce 30 kilos of coal and 4 nuggets of glod per hour, but they wouldn’t be using all of the available resources.
All points on the production possibility frontier are equally achievable with the given resrouces, and all points below and above the frontier are not achievable.

Answer 1

The correct response is a) Beth has an absolute advantage in both apples and potatoes, but Maria has a comparative advantage in potatoes. So Beth should specialize in the production of apples, and exchange them for Maria's potatoes.

Production is the process of mixing multiple inputs, both immaterial (such as plans or information) and material (such as metal, wood, glass, or polymers). In a perfect world, this output would be a product or service that is useful to people and has value. Production theory is the branch of economics that concentrates on production; it is closely related to the consumption (or consumer) theory of economics. Four Production Factors (Jiang, 2020) Utilizing the initial inputs productively leads to the production process and output (or factors of production). Land, labour, and capital are regarded as the three major production components and are referred to as primary producer commodities or services. Both the output process and the final product do not considerably change these essential inputs or turn them into integral parts of the final product. Materials and energy are categorized as secondary elements in classical economics since they are byproducts of land, labour, and capital. Further investigation reveals that primary factors cover all of the resources at play, including land, which includes the natural resources on and beneath the soil. However, there are differences between labour and human capital.

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