Question

Suppose the only input in agriculture is time and the following chart depicts the time it took for the Middle Colonies and New England to produce barley and milk. Using the principle of comparative advantage, what would be the most efficient solution?Time Required to Produce:Time to produce: New England Middle Colonies1 ton of barley 4 hours 5 hours1 ton of milk 3 hours 6 hours a. New England produces both barley and milk. b. New England produces barley and the Middle Colonies produce milk. c. New England produces milk and the Middle Colonies produce barley. d. There is insufficient information given to determine comparative advantage.

Answer 1

New England produces Milk and Middle Colonies produces Barley is correct.

Step-by-step explanation:

New England's opportunity cost of producing barley= 4/3 = 1.33 ton of milk

New England's opportunity cost of producing Milk = 3/4= 0.75 ton of barley.

Because New England has lower opportunity in the production of Milk .Therefore,it has the comparative advantage in the production of Milk. Hence, New england produces Milk.

Similarly, Middle Colonies's opportunity cost of producing Barley= 5/6= 0.83 ton of milk.

And Middle colonies opportunity cost of producing Milk= 6/5= 1.2 ton of barley.

Because Middle colonies opportunity cost in the production of Barley . Therefore, it has the comparative advantage in the production of Barley. Hence, Middle colonies produces Barley.

Hence,option(C) i.e New England produces Milk and Middle Colonies produces Barley is correct.