1)Country A and Country B are two countries that both produce Coffee and sugar.
ID: 1135836 • Letter: 1
Question
1)Country A and Country B are two countries that both produce Coffee and sugar. In Country A each worker in a one-hour period can produce either 13.11 pounds of Coffee or 7.3 pounds of sugar. In Country B each worker in a one-hour period can produce either 14.35 pounds of coffee or 3 pounds of sugar. Suppose both countries have constant opportunity cost of production and decide to specialize and exchange. The country that specializes in sugar is willing to sell 100 pounds of sugar for at least _____ pounds of coffee
2). You have been offered an extra shift at work this saturday and this will allow you to earn an extra $164. Your friend has invited you to go to six flags the same day and this will cost you $182. What is the opportunity cost of going to six flags?
3)
Consider the winter activity of skiing. Assume that the rental cost of ski equipment is $81 and the lift ticket costs $87. If you go skiing, you would wear the ski jacket you purchased last year for $126. If you do not go skiing, you could either work at your part-time job, which would earn you $147, or study at the library, which you value at $56.
Suppose that you were planning to spend Saturday working at your part-time job, but a friend asks you to go skiing. What is the opportunity cost of going skiing?
4)A country has constant opportunity cost of production. If they devote all of their resources to the production of blankets they can produce a total of 795 per week. If they devote all of their resources to the production of t-shirts they can produce a total of 400 shirts per week. What is the opportunity cost of producing 1 t-shirt? Enter a number rounded to two decimal places, such as 32.47 or 4.30. Do not enter any other words or characters.
Explanation / Answer
Answer
1) Country A and Country B are two countries that both produce Coffee and sugar. In Country A each worker in a one-hour period can produce either 13.11 pounds of Coffee or 7.3 pounds of sugar. Hence opportunity cost of producing 1 pound of sugar for Country A is 13.11/7.3 = 1.8 pound of coffee. In Country B each worker in a one-hour period can produce either 14.35 pounds of coffee or 3 pounds of sugar. Hence opportunity cost of producing 1 pound of sugar for Country B is 14.35/3 = 4.78 pound of coffee. Hence as opportunity cost of producing sugar is lower for country A. Hence Country A specializes in producing sugar. Hence Country A is willing to sell 100 pound of sugar for atleast 1.8*100 = 180 pound of Coffee.
The country that specializes in sugar is willing to sell 100 pounds of sugar for at least 180 pounds of coffee.
2) If he go to to six flags then he is sacrificing 164 (ha can earn) + 182(Cost of going to 6 flags) = $346
Hence opportunity cost of going to six flags is $346
3) If he is going for skeeing then he is sacrificing extra pay worth $147 and you will be paying rental cost of ski equipment is $81 and the lift ticket costs $87. As you have already purchased ski jacket lasy year then it will not be included in opportunity cost. Hence, the opportunity cost of going skiing is 147 + 81 + 87 = $315
Hence Opportunity Cost of going skiing is $315
4) If they devote all of their resources to blankets they can produce 795 per week. If they devote all of their resources to t-shirts they can produce a total of 400 shirts per week. Hence In order for producing 400 shirts they have to sacrifice 795 blankets. Hence in order to produce 1 t-shirt they have to sacrifice 795/400 = 1.99 Blankets.
The opportunity cost of producing 1 t-shirt is 1.99 blankets.
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