Use the following to answer question(s):
Exhibit: Bicycles and Radishes 1

-(Exhibit: Bicycles and Radishes 1) The exhibit shows production possibilities curves for two countries that produce only radishes and bicycles. The axes of both graphs are measured in equivalent units. Country A is now operating at point M, and Country B is now operating at point N. Suppose Country A discovered a new technology that greatly increased its ability to produce bicycles. This would:
A) lower the opportunity cost of producing radishes in Country A.
B) increase the opportunity cost of producing radishes in Country A.
C) have no effect on the opportunity cost of producing radishes in country A.
D) increase the opportunity cost of producing radishes in Country B.

Question

Use the following to answer question(s): 
Exhibit: Bicycles and Radishes 1
 
-(Exhibit: Bicycles and Radishes 1) The exhibit shows production possibilities curves for two countries that produce only radishes and bicycles. The axes of both graphs are measured in equivalent units. Country A is now operating at point M, and Country B is now operating at point N. Suppose Country A discovered a new technology that greatly increased its ability to produce bicycles. This would:
A) lower the opportunity cost of producing radishes in Country A. 
B) increase the opportunity cost of producing radishes in Country A. 
C) have no effect on the opportunity cost of producing radishes in country A. 
D) increase the opportunity cost of producing radishes in Country B.

Quizplus · Accepted Answer

When Country A discovers a new technology that greatly increases its ability to produce bicycles, it means that Country A can produce more bicycles for the same amount of resources. This shifts the production possibility curve outward for bicycles. As a result, to produce more bicycles, Country A would have to allocate more resources away from radish production, increasing the opportunity cost of producing radishes.

Use the Following to Answer Question(s)