A nation can manufacture either 10 units of product A or 4 units of product B. What is the opportunity cost of producing one unit of product B?

Multiple choice question for The International Economy And Globalization. Select an option, then review the explanation below.

Explanation

The opportunity cost of producing one unit of product B is calculated by dividing the maximum production of product A by the maximum production of product B. Since the country can produce 10 units of A or 4 units of B, the opportunity cost of 1 unit of B equals 10 ÷ 4 = 2.5 units of A.

Practice related questions from the same subject.

1.In which type of goods do Less Developed Countries (LDCs) typically hold a comparative advantage?
2.Why did output decline drastically in the economies undergoing transition?
3.When products are sold abroad at prices below the marginal cost of production and the marginal benefit to local consumers, which policy is most likely supporting this situation?
4.How do tariffs affect the production levels of domestic companies and the consumption habits of consumers?
5.The equilibrium exchange rate adjusts to neutralize disparities in which of the following international economic factors?

A nation can manufacture either 10 units of product A or 4 units of product B. What is the opportunity cost of producing one unit of product B?

Explanation

More The International Economy And Globalization MCQs