Table 2-11

Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-11.What is Scotland's opportunity cost of producing one motorcycle?
A)0.25 guitar
B)4 guitars
C)12 guitars
D)16 guitars

Question

Table 2-11
  
Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-11.What is Scotland's opportunity cost of producing one motorcycle?
A)0.25 guitar 
B)4 guitars 
C)12 guitars 
D)16 guitars

Quizplus · Accepted Answer

According to the table, Scotland can produce one motorcycle in 64 labor hours and one guitar in 16 labor hours. Therefore, the opportunity cost of producing one motorcycle in Scotland is 64/16=4 guitars.

The best choice is to produce motorcycles in Ireland and guitars in Scotland since Ireland has a lower opportunity cost of producing motorcycles (2 guitars) and Scotland has a lower opportunity cost of producing guitars (0.25 motorcycle). This will result in both countries maximizing their production and benefiting from trade.

Table 2-11 Table 2-11 Shows the Number of Labor Hours Required to of Labor