Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. Refer to the tables. The opportunity cost of the fifth unit of capital goods
A) is higher in North Cantina than in South Cantina.
B) is the same in North Cantina and South Cantina.
C) is lower in North Cantina than in South Cantina.
D) cannot be determined from the information provided.

Question

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.  Refer to the tables. The opportunity cost of the fifth unit of capital goods
A) is higher in North Cantina than in South Cantina. 
B) is the same in North Cantina and South Cantina. 
C) is lower in North Cantina than in South Cantina. 
D) cannot be determined from the information provided.

Quizplus · Accepted Answer

The opportunity cost of the fifth unit of capital goods is the amount of consumer goods that North and South must give up to produce one additional unit of capital goods. In North Cantina, to produce the fifth unit of capital goods, they must give up 60 units of consumer goods. In South Cantina, to produce the fifth unit of capital goods, they must only give up 50 units of consumer goods. Therefore, the opportunity cost of the fifth unit of capital goods is higher in North Cantina than in South Cantina.

Answer the Question on the Basis of the Following Production