Table: Production Possibilities for Tractors and Crude Oil Reference: Ref 8-5 Ta

Question

Table: Production Possibilities for Tractors and Crude Oil

Reference: Ref 8-5 Table: The Production Possibilities for Tractors and Crude Oil

(Table: The Production Possibilities for Tractors and Crude Oil) Use Table: The Production Possibilities for Tractors and Crude Oil. Which statement is TRUE?

Select one:

a. Tractor costs are the same in the United States and in Mexico.

b. The opportunity cost of crude oil is higher in the United States than in Mexico.

c. Crude oil costs are the same in the United States and in Mexico.

d. The opportunity cost of crude oil is lower in the United States than in Mexico.

Explanation / Answer

Here, on giving up 1 tractor the US can produce 0.5 thousand units of Crude oil. But in Mexico on giving up one tractor they can produce 3 thousand barrels of crude oil. So, the opportunity cost of crude oil is lower in the United States than in Mexico.

The answer is "D".  

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