Asked by Horacio Nicolas on Jun 14, 2024
Verified
If the slopes of the production possibility frontiers involving sugar and rice in countries A and B are equal
A) the opportunity cost of producing sugar is less in Country A.
B) the opportunity cost of producing rice is less in Country B.
C) specialization does not benefit either country.
D) each country will produce identical quantities of sugar and rice.
Opportunity Cost
The worth of the second-best option that is given up as a consequence of deciding on a course of action.
Production Possibility Frontiers
A curve depicting all maximum output possibilities for two goods, given a set of inputs.
Rice
A staple food grain consumed widely around the world, particularly in Asia, known for its versatility and ability in sustaining large populations.
- Ascertain the opportunity cost and appreciate its role in deciding comparative advantage.
Verified Answer
TZ
Tommy ZhengJun 15, 2024
Final Answer :
C
Explanation :
When the slopes of the production possibility frontiers (PPFs) are equal between two countries for two goods, it means that the opportunity cost of producing one good in terms of the other is the same in both countries. Therefore, there is no comparative advantage, and specialization would not benefit either country.
Learning Objectives
- Ascertain the opportunity cost and appreciate its role in deciding comparative advantage.