Question

Scenario 20.1 Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and...

Scenario 20.1
Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar.

Refer to Scenario 20.1. What is the opportunity cost of producing coffee in Chile?

Group of answer choices

2 pounds of sugar

4 pounds of sugar

Two-fifth of a pound of sugar

Half a pound of sugar

One-third of a pound of sugar

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans: 2 pounds of sugar

Explanation:

The opportunity cost of producing coffee in Chile is 2 pounds of sugar. Opportunity cost refers to the cost which is foregone or sacrificed in order to produce another good. In the above scenario , the opportunity cost of producing coffee in Chile is 2 pounds of sugar and the opportunity cost of sugar is 5 units of coffee.

The opportunity cost of producing 1 unit of coffee in Chile = 2 / 5 = 2/5th of pound of sugar or 0.4 pound of sugar.

The opportunity cost of producing 1 pound of sugar in Chile = 5 / 2 = 2.5 units of coffee

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Comparative Advantage There are two countries in the world. There are also only two different types...
Comparative Advantage There are two countries in the world. There are also only two different types of goods produced, food and clothing. Each country has the same amount of “inputs” (i.e. labor, capital, raw materials, etc.), which amounts to 100,000 units of input. Below is a chart that lists out how many units of output each country could create if they created just one type of good. For example, if Country A produced ONLY food, then with 100,000 units of...
Microeconomics: Comparative Advantage: NOTE: I ONLY NEED THE ANSWER FOR (e) California is very fertile. Farmers...
Microeconomics: Comparative Advantage: NOTE: I ONLY NEED THE ANSWER FOR (e) California is very fertile. Farmers can produce avocados and corn on their land, 6 and 10 units per unit of land respectively. They have 5 units of land. In the Canadian prairies one can also grow avocados and corn, at 1 and 5 units per unit of land. There are 15 units of land. Assume both countries have perfectly competitive markets. Let the utility function of consumers in each...
1) If Country A is absolutely better at producing everything than Country B, then there is...
1) If Country A is absolutely better at producing everything than Country B, then there is no incentive for Country A to engage in trade with Country B ( True or False?) 2)In one day Sam can produce 40 salads or 32 sandwiches. What is the opportunity cost of producing 1 sandwich?   3)If Tom has a comparative advantage in producing corn then he must also have an absolute advantage in producing corn (T/F?) 5) In one hour John can produce...
True or False? 1) If Country A is absolutely better at producing everything than Country B,...
True or False? 1) If Country A is absolutely better at producing everything than Country B, then there is no incentive for Country A to engage in trade with Country B. 2) If Tom has a comparative advantage in producing corn then he must also have an absolute advantage in producing corn. 3) If Joe can produce a good at a lower opportunity cost than Fred, then Joe must have an absolute advantage in producing this good. 4) Consider the...
In this Assessment, you will apply your understanding of comparative advantage as a foundation for trade,...
In this Assessment, you will apply your understanding of comparative advantage as a foundation for trade, along with your understanding of the crucial concept of changes in supply and demand equilibrium. You will also provide a rational approach on how cultural differences and the downfalls of stereotyping people from foreign cultures and misunderstanding their cultural attitudes affect international trade. This Assessment requires you to use the Microsoft® Word® template provided to compose a combination of short paragraph answers, computations, and...
1.A firm hires labor up to the point where the Question 19 options: 1) real wage...
1.A firm hires labor up to the point where the Question 19 options: 1) real wage rate equals the nominal wage rate. 2) additional hour of labor produces extra output that equals the real wage rate. 3) additional hour of labor produces extra output that equals the nominal wage rate. 4) firm can sell the extra output. 2.An increase in the quantity of investment demanded (demand for loanable funds) occurs when 1) the real interest rate falls. 2) the real...
3. Consider Iran and Iraq and their production of oil and olive oil. Relatively recent OPEC...
3. Consider Iran and Iraq and their production of oil and olive oil. Relatively recent OPEC estimates indicate that in July 2012, Iran produced about 4.1 million barrels of oil per day and Iraq produced about 3.2 million barrels of oil per day, making them the second- and third-largest oil producers in OPEC, behind Saudi Arabia (and the 4th and 7th largest oil producing countries in the world). Suppose that Iran and Iraq both produce barrels of oil and bottles...
1?Basic factors of production available to a society are * A. natural resources, labor and capital....
1?Basic factors of production available to a society are * A. natural resources, labor and capital. * B. natural resources, labor and money. * C. labor, money and environment. * D. natural resources, money and infrastructure. 2?Total cost is * A. the sum of total fixed cost and total variable cost. * B. increasing with output. * C. equal to total fixed cost when production level is zero. * D. all the above true. 3?Suppose a certain firm is able...
1) Consider a firm that uses only capital and labor. In the short-run the firm: A....
1) Consider a firm that uses only capital and labor. In the short-run the firm: A. Will never face diminishing returns to labor B. Faces diminishing returns to labor because capital cannot be changed C. Faces increasing returns to labor because capital is variable D.Faces diminishing returns to capital because labor can be changed 2) Tim started a lawn mowing business during summer break using his family's lawn mower, which statement best explains the shape of the production function? A....
Juanita is deciding whether to buy a skirt that she wants, as well as where to...
Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $129 for the skirt: Store Travel Time Each Way Price of a Skirt (Minutes) (Dollars per skirt) Local Department...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT