Chapter 4, Problem 2MCQ

To determine

The question requires us to determine the opportunity cost of wheat for country A.

Explanation of Solution

The following graph represents the production of wheat and textile in country A and country B:

Country	Wheat (bushels)	Textile
Country A	200	100
Country B	100	150

From the given table:

The opportunity cost of producing a bushel of wheat in country A

  $\begin{array}{l}=\frac{100}{200}\\ =\frac{1}{2}\text{unit of textile}\end{array}$

Thus, option “a” is correct.

Economics Concept Introduction

The country with a lower opportunity cost of producing a product will have a comparative advantage in producing that product. A lower opportunity cost indicates a less quantity of foregone goods a country has to sacrifice to produce a particular product.