Consider a World of Two Countries Facing Opportunity Costs and Producing

question 213

Multiple Choice

Consider a world of two countries facing opportunity costs and producing only wheat and cloth. In one hour, residents of Country A can produce a maximum of either 1 unit of wheat or 0.5 unit of cloth, whereas residents of Country B can produce a maximum of either 0.3 unit of wheat or 0.4 unit of cloth. Country B should export

• A) wheat and cloth; country A should not export anything.
• B) wheat and country A should export cloth.
• C) nothing and country A should export both wheat and cloth.
• D) cloth and country A should export wheat.

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Definitions:

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