Figure 3-3

-Refer to Figure 3-3.Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo.Which of the following combinations of tacos and burritos could Dina then consume,assuming Dina specializes in taco production and Arturo specializes in burrito production?
A) 100 tacos and 200 burritos
B) 200 tacos and 130 burritos
C) 300 tacos and 60 burritos
D) 340 tacos and 40 burritos

Question

Figure 3-3
 
-Refer to Figure 3-3.Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo.Which of the following combinations of tacos and burritos could Dina then consume,assuming Dina specializes in taco production and Arturo specializes in burrito production?
A) 100 tacos and 200 burritos 
B) 200 tacos and 130 burritos 
C) 300 tacos and 60 burritos 
D) 340 tacos and 40 burritos

Quizplus · Accepted Answer

Since Arturo is willing to trade 6 burritos for every 10 tacos produced by Dina, the exchange rate is 6/10 or 0.6 burritos per taco. To find out the combinations of tacos and burritos that Dina could consume, we need to find the points on the PPF that would give Dina a slope of -0.6 (since that's the opportunity cost of producing one taco in terms of burritos).

Looking at the PPF in Figure 3-3, the point that satisfies this condition is approximately (300 tacos, 60 burritos). This means that if Dina produces 300 tacos and trades 6 burritos for every 10 tacos, she could consume 60 burritos. This is the only combination of tacos and burritos listed in the answer choices that falls on the PPF, so the best choice is C.

Figure 3-3 -Refer to Figure 3-3.Suppose Arturo Is Willing to Trade 6