Macroeconomics 11th Edition by Michael Parkin

Exercise 27

Use the following data to work Problem. Brazil produces ethanol from sugar at a cost of 83 cents per gallon. The United States produces ethanol from corn at a cost of $1.14 per gallon. Sugar grown on one acre of land produces twice the quantity of ethanol as the corn grown on an acre. The United States imports 5 percent of the ethanol it uses and produces the rest itself. Since 2003, U.S. ethanol production has more than doubled and U.S. corn production has increased by 45 percent.
a. Does Brazil or the United States have a comparative advantage in producing ethanol?
b. Sketch the PPF for ethanol and other goods and services for the United States.
c. Sketch the PPF for ethanol and other goods and services for Brazil.