For each pair of jeans Casina produces, it gives up the opportunity to make 50 pounds of chocolate truffle. Marina can produce one pair of jeans for every 100 pounds of chocolate truffle it produces. Suppose the data is converted into production possibilities frontiers (PPFs), with constant opportunity costs for both countries. While the pounds of chocolate truffle produced are measured on the vertical axis, the pairs of jeans produced are measured along the horizontal axis. Identify the correct statement in this case.

Question

Quizplus · Accepted Answer

The opportunity cost per pair of jeans for Casina is 50 pounds of chocolate truffle, thus the slope of its PPF is -50. On the other hand, Marina can produce one pair of jeans for every 100 pounds of chocolate truffle it produces, which implies the opportunity cost per pound of chocolate truffle is 1/100 or 0.01 pairs of jeans. Therefore, the slope of Marina's PPF is -0.01, which is less steep than Casina's (-50). Hence, the correct statement is that the slope of Marina's PPF is steeper than Casina's.

For Each Pair of Jeans Casina Produces, It Gives Up