Product Northland West Coast Pastries (per hour) 50,000 100,000 Sandwiches (per
ID: 1165486 • Letter: P
Question
Product
Northland
West Coast
Pastries (per hour)
50,000
100,000
Sandwiches (per hour)
25,000
200,000
1. What is the opportunity cost of producing pastries in Northland? Of producing sandwiches in Northland? The answers should reflect use of the comparative advantage formula found in chapter 32.
I have a similar question could you work this out of a piece of paper so I can figure out the next one please.
Product
Northland
West Coast
Pastries (per hour)
50,000
100,000
Sandwiches (per hour)
25,000
200,000
Explanation / Answer
1. Ans : The opportunity cost of producing pastries in Northland is 0.50
Explanation :
25000 / 50000 = 0.50
1. Ans : The opportunity cost of producing sandwiches in Northland is 2
Explanation :
50000 / 25000 = 2
According to comparative advantage theory a country should specialise in the production of those goods where it has lower oppertunity cost.
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