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Microeconomics: Comparative Advantage in Producing Pigs and Corn

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Suppose that two people, Mary and John each live alone in an isolated region. They each have the same resources available, and they grow corn and raise pigs. If Mary devotes all her resources to growing corn, she can raise 200 pounds of corn per year. If she devotes all her resources to raising pigs, she can raise 50 pigs per year. (If she apportions some resources to each, then she can produce any linear combination of pigs and corn that lies between those extreme points. If John devotes all his resources to growing corn, he can raise 80 pounds of corn per year. If he devotes all his resources to raising pigs, he can raise 40 pigs per year. (If he apportions some resources to each, then he can produce any linear combination of pigs and corn that lies between those extreme points.)

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This post shows how trade can help people / countries by using the concepts of absolute advantage and comparative advantage with calculations in 238 words.

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Mary can produce any linear combination of corn and pigs that lies between 200 pounds of corn and 50 pigs per year. The opportunity cost of producing corn is the loss in production of pigs due to allocation of resources for producing an additional pound of corn.
Mary's Opportunity cost of producing corn = 50/200=0.25 pigs

Mary can ...

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