Q- The table on the next page shows the potential output combinations of oranges

Question

Q- The table on the next page shows the potential output combinations of oranges and jars of prickly pear jelly (from the flower of the prickly pear cactus) for Florida and Arizona. a.Compute the opportunity cost for Florida of oranges in terms of jars of prickly pear jelly. Do the same for prickly pear jelly in terms of oranges. b.Compute the opportunity cost for Arizona of oranges in terms of jars of prickly pear jelly. Do the same for prickly pear jelly in terms of oranges. c.Would it make sense for Florida to specialize in producing oranges and for Arizona to specialize in producing prickly pear jelly and then trade? Why or why not?

Explanation / Answer

a) Florida Oranges | Prickly Pear jelly | opportunity cost (in terms of pear jelly) 0 10 0 50 8 6.25 100 6 16.67 150 4 37.5 200 2 100 250 0 infinity b)arizona Oranges | Prickly Pear jelly | opportunity cost for oranges (in terms of pear jelly) 0 500 0 20 400 0.05 40 300 0.133 60 200 0.3 80 100 0.8 100 0 infinity Oranges | Prickly Pear jelly | opportunity cost for oranges (in terms of oranges) 0 500 infinity 20 400 20 40 300 7.5 60 200 3.33 80 100 1.25 100 0 0 yes , it will be good for florida to specialize in oranges and for arizona to specilize in pear jelly , yes trade since less cost is paid for more amount.

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