Currently, a farmer can either grow 40 bushels of wheat or 120 bushels of corn per acre. If he were able to trade 80 bushels of corn for 30 bushels of wheat, would he be better off or worse off?
A)Worse off because his opportunity cost of wheat would increase from 2.7 bushels of corn to 3 bushels of corn.
B)Better off because his opportunity cost of wheat would fall from 80 bushels to 50 bushels.
C)Better off because his opportunity cost of wheat would fall from 3 bushels of corn to 2.7 bushels.
D)There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

The opportunity cost of producing wheat is initially 3 bushels of corn (120/40). By trading, he can get 30 bushels of wheat for 80 bushels of corn, reducing the opportunity cost to 2.7 bushels of corn per bushel of wheat (80/30), making him better off.

Currently, a Farmer Can Either Grow 40 Bushels of Wheat