Can you explain number 51 and why B is the right answer d. D nomy cannot current
ID: 1135860 • Letter: C
Question
Can you explain number 51 and why B is the right answer d. D nomy cannot currently produce 30 toothbrushes and 45 because a. some of its resources are unemployed. b. inefficiencies exist in this economy's production process. c. given its current technology, it does not have the resources to produce that level o d. All of the above are correct. Table 3-4 ume that the farmer and the rancher can switch between producing meat and produc potatoes at a constant rate. Labor Hours Needed Pounds Produced in to Make 1 Pound of Meat 40 Hours Meat Potatoes 20 Farmer Rancher 10 10 37. Refer to Table 3-4. Assume that the farmer and the rancher each has 40 labor hours availa each person divides his time equally between the production of meat and potatoes, then tota production is a. 5 pounds of meat and 10 pounds of potatoes. b. 7 pounds of meat and 12.5 pounds of potatoes. c. 10 pounds of meat and 20 pounds of potatoes d. 14 pounds of meat and 25 pounds of potatoes. 0Explanation / Answer
The opportunity cost of 1 pound of meat is 20/4 = 5 potatoes for farmers and 5/10 = 0.2 potatoes for rancher so that rancher has comparative advantage in production of meat while farmer produces potatoes. Now when they produce what they have specialization in, farmer produces 20 pounds of potatoes and rancher produces 10 pounds of meat.
Initially farmer was producing 3 pounds of meat and 5 pounds of potatoes while rancher was producing 4 pounds of meat and 3 pounds of potatoes. Now they trade 4 pounds of meat with 8 pounds of potatoes so that rancher who is producing 10 pounds of meat trades 4 pounds of meat and is now left with 6 pound of meat and 8 pounds of potatoes.
Clearly he gains 2 pounds of meat from his initial production and gains 5 pounds of potatoes. Farmer produces 20 pounds of potatoes, gives away 8 pounds to rancher and is left with 12 pounds, which is 7 pounds greater than his initial production of 5 pounds. In addition he gets 4 pounds of meat as well which is 1 pound greater than his initial production of 3 pounds. Hence Option B is correct
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