Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.

-Refer to Table 3-4.Without trade,the farmer produced and consumed 2 pounds of meat and 4 pounds of potatoes and the rancher produced and consumed 4 pounds of meat and 2 pounds of potatoes.Then,each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 3 pounds of meat for 6 pounds of potatoes.As a result,the farmer gained
A) 1 pound of meat and 2 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes.
B) 1 pound of meat and 2 pounds of potatoes and the rancher gained 1 pound of meat and 4 pounds of potatoes.
C) 3 pounds of meat and 6 pounds of potatoes and the rancher gained 5 pounds of meat and 6 pounds of potatoes.
D) 4 pounds of meat and 12 pounds of potatoes and the rancher gained 6 pounds of meat and 8 pounds of potatoes.

Question

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.
 
-Refer to Table 3-4.Without trade,the farmer produced and consumed 2 pounds of meat and 4 pounds of potatoes and the rancher produced and consumed 4 pounds of meat and 2 pounds of potatoes.Then,each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 3 pounds of meat for 6 pounds of potatoes.As a result,the farmer gained
A) 1 pound of meat and 2 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes. 
B) 1 pound of meat and 2 pounds of potatoes and the rancher gained 1 pound of meat and 4 pounds of potatoes. 
C) 3 pounds of meat and 6 pounds of potatoes and the rancher gained 5 pounds of meat and 6 pounds of potatoes. 
D) 4 pounds of meat and 12 pounds of potatoes and the rancher gained 6 pounds of meat and 8 pounds of potatoes.

Quizplus · Accepted Answer

Before trade, the farmer had a comparative advantage in potatoes because he had a lower opportunity cost of producing them (2/4 or 1/2 meat for 1 potato) compared to the rancher (4/2 or 2 meat for 1 potato). The rancher had a comparative advantage in meat.

After specializing and trade, the farmer produces only potatoes and trades 3 meat for 6 potatoes. This means the farmer now has 3 additional pounds of potatoes but 3 fewer pounds of meat. The rancher produces only meat and trades 3 meat for 6 potatoes. This means the rancher now has 6 additional pounds of potatoes but 3 fewer pounds of meat.

Therefore, the farmer gained 1 additional pound of meat and 2 additional pounds of potatoes, while the rancher gained 1 additional pound of meat and 4 additional pounds of potatoes. Choice B is the only answer option that matches this outcome.

Table 3-4 Assume That the Farmer and the Rancher Can Switch Between