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 Iceland?

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 Iceland?

Quizplus · Accepted Answer

To produce one snow cone in Iceland, we have to give up producing 2/3 of a popsicle. This is the opportunity cost of producing one snow cone in Iceland.

The best choice(s) depend on the goals and preferences of the country. If Iceland wants to produce more snow cones, it can specialize in producing snow cones and import popsicles from Greenland. If Greenland wants to produce more popsicles, it can specialize in producing popsicles and import snow cones from Iceland. The optimal choice(s) for each country depend on their comparative advantage and the terms of trade.

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