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-(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.If Indonesia and Malaysia trade 1 microchip for 1.5 tires,the most that Indonesia can consume is _____ microchips and _____ tires,while the most that Malaysia can consume is _____ microchips and _____ tires.

Question

Use the following to answer question: 
-(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.If Indonesia and Malaysia trade 1 microchip for 1.5 tires,the most that Indonesia can consume is _____ microchips and _____ tires,while the most that Malaysia can consume is _____ microchips and _____ tires.

Quizplus · Accepted Answer

According to the graph, Indonesia's maximum consumption point is at 400 microchips and 600 tires, while Malaysia's maximum consumption point is at 1200 microchips and 600 tires. If Indonesia trades 1 microchip for 1.5 tires, it can get an additional 600/1.5 = 400 microchips, which brings its total microchip consumption to 800. Similarly, if Malaysia trades 1 microchip for 1.5 tires, it can get an additional 600/1.5 = 400 microchips, which brings its total microchip consumption to 1600, but 400 of those must be given to Indonesia. Therefore, Malaysia's maximum consumption would be 1200 microchips and 600 tires. Thus, the correct choice is C.

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