Comparative and absolute advantage: Manuel and Poornima are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa, all acres to producing barley, or to produce alfalfa on some of the land and barley on the rest:
Alfalfa (Bushels per acre) Barley (Bushels per acre)
Manuel 40 28
Poornima
On the following graph, use the blue line (circle symbol) to plot Manuel's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Poornima's PPF.
Manuel's PPF
Poornima's PPF
Manuel has an absolute advantage in the production of alfalfa and an advantage in the production of barley.
Manuel's opportunity cost of producing 1 bushel of barley is 1.4 bushels of alfalfa, whereas Poornima's opportunity cost of producing 1 bushel of barley is 0.875 bushels of alfalfa. Because Manuel has a higher opportunity cost of producing barley than Poornima, he has a comparative advantage in the production of barley, and Poornima has a comparative advantage in the production of alfalfa.