Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. Germany wishes to purchase computers from the United States in exchange for cameras. What is the maximum number of cameras per computer that Germany would be willing to pay the United States?

Question

Quizplus · Accepted Answer

Germany can produce 20 cameras or 1 computer in an hour, so the opportunity cost of producing 1 computer is 20 cameras. Therefore, Germany would be willing to pay up to 20 cameras per computer to the United States.

Suppose That a Typical German Factory Can Produce 20 Cameras