Attempts: Score: /1 12. Chapter manko7t, Section.18, Problem 195 Figure 3-19 Chi

Question

Attempts: Score: /1 12. Chapter manko7t, Section.18, Problem 195 Figure 3-19 Chile's Production Possibilities Frontler Colombla's Production Possibliities Frontler soybeaxs ix younds) 20 18 16 2 ( ponds) 18 16 14 12 10 12 10 24 6 18:10 12 14 16 is 20 trei / 3 : 2 4 6 )8 10 12 14 16 18 20 or fin pourds ie younds) Refer to Figure 3-19. Chile and Colombia would not be able to gain from trade if Colombila's opportunity cost of one pound of soybe O A. 1/2 pound of coffee. OB. 2 pounds of coffee. C. 4/3 pounds of coffee. O D. 3/4 pound of coffee.

Explanation / Answer

Ans) C is the correct option. 4/3 coffee

For chile, 12 soybeans = 16 coffee

the opportunity cost of producing coffee = 16 / 12 = 4/3 coffee.

The two countries do not when opportunity cost of producing the good becomes same in both the countries. So when Columbia opportunity cost becomes equal to chile's opportunity cost of producing coffee then chile and Columbia don't gain from trade.

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