figure 3-21 if Uzbekistan and Azerbaijan switch from each country dividing its t
ID: 1164779 • Letter: F
Question
figure 3-21 if Uzbekistan and Azerbaijan switch from each country dividing its time equ Uzbekistan's Production Possibilities Frontier Azerbaijan's Production Possibilities Frontier maits ?nails 100 100 90 80 70 90 70 50 40 30 20 10 50 40 30 10 10 15 20 25 30 35 40 45 50 bs 5 10 15 20 25 30 35 40 45 50 boits Refer to Figure 3-21 If Uzbekistan and Azerbaijan switch from each country dividing its time equally between the production of bolts and nails to each country spending all of its time producing the good in which it has a comparative advantage, then total production will increase by O a. 5 bolts and 10 nails O b. 15 bolts and 40 nails c, 20 bolts and 50 nails O d. 30 bolts and 30 nailsExplanation / Answer
a. 5 bolts and 10 nails
If they both divide time equally between two goods. Uzbekistan produces 15 bolts and 30 nails. Azerbaijan produces 10 bolts and 40 nails
Total production of bolts = 15+10= 25
Total production of nails= 30+40= 70
Noe if they trade with each other.
Uzbekistan's Opportunity cost of producing one nail is 30/60= 0.5
Azerbaijan's opportunity cost of producing one nail is 20/80= 0.25
Opportunity cost of producing nails is lower in Azerbaijan. Hence Azerbaijan specialises in producing nails and Uzbekistan specialises in producing bolts.
Total bolts produced= 30
Total nails produced= 80
Increase in bolts= 30-25= 5
Increase in nails= 80-70= 10
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.