Figure 2-9 Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland.Each country produces two goods,snow cones and popsicles.
-Refer to Figure 2-9.What is the opportunity cost of producing 1 snow cone in Greenland?

Question

Figure 2-9  Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland.Each country produces two goods,snow cones and popsicles.
-Refer to Figure 2-9.What is the opportunity cost of producing 1 snow cone in Greenland?

Quizplus · Accepted Answer

To produce 1 snow cone in Greenland, the opportunity cost is giving up 5/6 of a popsicle (as seen by moving from point A to point B on Greenland's PPF). Therefore, Greenland should produce at point B to maximize their production of both goods. Iceland's PPF does not intersect Greenland's, so there is no trade opportunity between the two countries.

Figure 2-9 Figure 2-9 Shows the Production Possibilities Frontiers