Table 9-11
Production and
Consumption Production
Without Trade With Trade
Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-11. Prior to trade, what was the opportunity cost to produce 1 hat in Denmark?
A) 1/6 of a clock
B) 2/3 of a clock
C) 1.5 clocks
D) 6 clocks

Question

Table 9-11
Production and
Consumption Production
Without Trade With Trade
  Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-11. Prior to trade, what was the opportunity cost to produce 1 hat in Denmark?
A) 1/6 of a clock 
B) 2/3 of a clock 
C) 1.5 clocks 
D) 6 clocks

Quizplus · Accepted Answer

Prior to trade, Denmark would have to give up producing 6 clocks to produce 1 hat, which represents the opportunity cost of producing 1 hat in Denmark.
 
Answer: Trade would benefit both countries.
 With trade, Denmark can specialize in producing clocks while Belize produces hats. This allows both countries to produce more of each product and consume more overall. Additionally, they can trade with each other and benefit from comparative advantage.

Table 9-11 Production and