decreases This answer cannot be determined from the graph. 22. Figure 3-17 Refer
ID: 1131900 • Letter: D
Question
decreases This answer cannot be determined from the graph. 22. Figure 3-17 Refer to Figure 3-17. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision? a. 2/5 pie b. 2 pies c. 5/2 pies d. 10 pies 23. Refer to Figure 3-17. Suppose Daisy decides to increase her production of pies by 6. What is the opportunity cost of this decision? a. 8/3 tarts b. 4.5 tarts Maxine's Production Possibilities Frontier Daisy's Production Possibilities Frontier 18 14 14 12 10 3 69 12 15 18 21 24 27 30 ies 3 69 12 15 18 21 24 27 30 es c. 8 tarts d. 10 tarts 24. Refer to Figure 3-17. Suppose Daisy is willing to trade 3/4 tart to Maxine for each pie that Maxine makes and sends to Daisy. Which of the following combinations of pies and tarts could Maxine not then consume, assuming Maxine specializes in making pies and Daisy specializes in making tarts? 4 pies and 6 tarts 6 pies and 5 tarts 8 pies and 3 tarts 10 pies and 1.5 tarts 25. Refer to Figure 3-17. Maxine has an absolute advantage in the production of both goods and a comparative advantage in the production of pies. both goods and a comparative advantage in the production of tarts. a. c. neither good and a comparative advantage in the production of pies. neither good and a comparative advantage in the production of tarts. d. 26. a. Refer to Figure 3-17. Daisy has an absolute advantage in the production of both goods and a comparative advantage in the production of pies. both goods and a comparative advantage in the production of tarts. neither good and a comparative advantage in the production of pies. neither good and a comparative advantage in the production of tarts. 27. Refer to Figure 3-17. If Maxine and Daisy switch from each person dividing her time equally between the production of pies and tarts to each person spending all of her time producing the good in which she has a comparative advantage, then total production of tarts will increase by 28. Refer to Figure 3-17. At which of the following prices would both Maxine and Daisy gain from trade with each other? 4 tarts for 2 pies 8 tarts for 12 pies a.Explanation / Answer
Question 22
The production possibilities frontier of Maxine shows that if Maxine uses all her resources in the production of tarts, she can produce a maximum of 6 tarts.
On the other hand, if she uses all her resources in the production of pies, she can produce a maximum of 12 pies.
So,
The opportunity cost of producing 1 tart is (12/6) 2 pies.
This means that if Maxine wants to increase the production of tarts by 1 unit, she has to sacrifice the production of 2 pies.
Thus, if Maxine wants to increase her production of tarts by 5 then in that case she has to sacrifice the production of (5*2) 10 pies.
So, the opportunity cost of this decision is 10 pies.
Hence, the correct answer is the option (d).
Question 23
The production possibilities frontier of Daisy shows that if Daisy uses all her resources in the production of tarts, she can produce a maximum of 20 tarts.
On the other hand, if she uses all her resources in the production of pies, she can produce a maximum of 15 pies.
So,
The opportunity cost of producing 1 pie is (20/15) 4/3 tarts.
This means that if Daisy wants to increase the production of pie by 1 unit, she has to sacrifice the production of 4/3 tarts.
Thus, if Daisy wants to increase her production of pie by 6 then in that case she has to sacrifice the production of [(4/3) * 6] 8 tarts.
So, the opportunity cost of this decision is 8 tarts.
Hence, the correct answer is the option (c).
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