In a single year,the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Belgium can raise 50 tons of beef or produce 750 boxes of tulips.Trade will take place between these two countries if 1 ton of beef costs _____ boxes of tulips.

Question

Quizplus · Accepted Answer

To determine the opportunity cost of producing beef in the Netherlands, we need to divide the amount of tulips produced (1,000) by the amount of beef produced (100). This results in an opportunity cost of 10 boxes of tulips per ton of beef.

Similarly, to determine the opportunity cost of producing beef in Belgium, we need to divide the amount of tulips produced (750) by the amount of beef produced (50). This results in an opportunity cost of 15 boxes of tulips per ton of beef.

Since Belgium's opportunity cost of producing beef is higher than the Netherlands', it is more efficient for them to specialize in tulip production and trade with the Netherlands for beef. The trade will occur if the price of beef in terms of tulips is between 10 and 15.

Therefore, 1 ton of beef costs 12 boxes of tulips, making the correct answer C) 12.

In a Single Year,the Netherlands Can Raise 100 Tons of Beef