3. Drag the correct word or phrase to the comesponding biank in each sentence Po

Question

3. Drag the correct word or phrase to the comesponding biank in each sentence Port Ales on the RF of an economy, pot A consists of 10 units of Xand 100unitsofY.Point Bcostes o, 20 unts or x and 100units of Y, Does pone ne on, anon - The opportnty cost for Sam of proud ggoods xand Ys:X-2Y and Y-2x. The opportunity cost of adson of pro hong go hind iesnd iv-ink the per? has a comparative advantage in producing Xandhas a comparative adotage produong Y The coportunity coset for Jilian of producing goods X is 1x-12%, which means the opportunity cost for Xillin of producing o 1Y is

Explanation / Answer

Production possibility frontier (PPF) is term used to define the maximum goods and services that any economy can achieve if it uses all of its resources of goods and labor. Therfore the point B lies above the PPF.

Sam have a comparative advantage in producing x because the opportunity cost of production of x for Sam is less than Jackson.

Jackson have a comparative advantage in producing y because the opportunity cost of production of y for Jackson is less than Sam.

The opportunity cost of production of x forJulian is:

1X = 12Y

Or 12Y = 1X

1Y = (1/12)X

Therfore opportunity cost is 1/12th X.

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