Why C is wrong? Please don\'t take the picture Table 3-5 Assume that England and
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Why C is wrong? Please don't take the picture
Table 3-5 Assume that England and Spain can switch between producing cheese and producing bread at a constant rate Labor Hours Needed to Make 1 Unit of Number of Units Produced in 40 Hours Cheese Bread 4 Cheese 40 110 10 4 Refer to Table 3-5. We could use the information in the table to draw a production possibilities frontier for England and a second production possibilities frontier for Spain. If we were to do this, measuring bread along the horizontal axis, then a. the slope of England's production possibilities frontier would be -4 and the slope of Spain's production possibilities frontier would be -2. b. the slope of England's production possibilities frontier would be 0.25 and the slope of Spain's production possibilities frontier would be 0.5. c, the slope of England's production possibilities frontier would be-0.25 and the slope of Spain's production possibilities frontier would be-05 d. the slope of England's production possibilities frontier would be 4 and the slope of Spain's production possibilities frontier would be 2.Explanation / Answer
Correct option is (d).
We first compute Opportunity Cost (OC) as follows.
For England, OC of Bread = 40/10 = 4 Cheese
For Spain, OC of Bread = 10/5 = 2 Cheese
Slope of production possibilities frontier is the OC of Bread in terms of units of Cheese. Therefore, slope of England's PPF is 4 and slope of Spain's PPF is 2.
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