Question

Use the following information for questions 9-12

-In one period, Country X can either produce 10 units of cider, or 8 units of beer, and Country Y can either produce 12 units of cider or 16 units of beer

9. What is the opportunity cost of each additional unit of cider produced by country X:

A. 1.25 units of beer

B. 0.8 units of beer

C. 10 units of cider

D. 8 units of beer

E. none of the above

10. Based on the information given which of the following is an accurate statement?

A. Country X has a comparative advantage in producing cider

B. Country X has a comparative advantage in producing beer

C. Country X has a comparative advantage in producing both cider and beer

D. Country Y has a comparative advantage in producing both cider and beer

E. none of the above

11. Which of the following is not correct when it comes to the ways in which Country X and Y would be made better off by implementing the law of comparative advantage:

A. countries X and Y can consume at points outside of their respective PPC

B. countries X and Y can increase their own consumption possibilities

C. countries X and Y can increase their own production possibilities

D. none of the above (i.e. all of the above are correct)

12. If there is an increase in productivity associated with producing cider and Country X, then which of the following will occur within country X:

A. The opportunity cost of producing cider will decrease and there will be no change in the opportunity cost of producing beer

B. The opportunity cost of producing cider will increase in the opportunity cost of producing beer will decrease

C. The opportunity cost of producing cider will decrease in the opportunity cost of producing beer will increase

D. The opportunity cost of producing both cider and beer will decrease

E. The opportunity cost of producing both cider and beer will increase

Answer 1