Figure 22-6

-From Figure 22-6, one can infer that

Question

Figure 22-6
 
-From Figure 22-6, one can infer that

Quizplus · Accepted Answer

The figure represents the production possibility curves of two countries, Honduras and Belize, for corn and bananas. The slope of the curve represents the opportunity cost of producing one good in terms of the other. Honduras has a steeper curve for corn, indicating that it has a higher opportunity cost of producing corn than Belize. Therefore, it is more efficient for Honduras to produce bananas instead of corn. However, Honduras would still be willing to trade bananas for corn as long as the exchange ratio is greater than its opportunity cost of producing bananas, which is shown by the slope of the banana curve. In other words, Honduras would be willing to trade bananas as long as it receives more corn for each banana it gives up than it would have to give up if it produces that same amount of corn. This is true when the exchange ratio is greater than 1/2 corn:1 banana, which is the point where the two curves intersect. Therefore, the best answer is B.

Figure 22-6 -From Figure 22-6, One Can Infer That