Question

Answer the question on the basis of the data given for two regions, East and West, of a hypothetical world. The nations have the production possibilities for units of food and clothing given below.
East Production Possibilities West Production Possibilities
A B C D A B C D
Food 24 16 8 0 Food 45 30 15 0
Clothing 0 4 8 12 Clothing 0 5 10 15
Which of the following is true?
a. For the West region, the cost of 5 units of clothing is 10 units of food.
b. For the West region, the cost of 15 unlts of food Is 5 unlts of clothing.
c. For the East region, the cost of 8 units of food Is 8 units of clothing.
d. For the East region, the cost of 4 units of clothing is 6 unlts of food.

Answer 1

Answer:

b. For the West region, the cost of 15 unlts of food Is 5 unlts of clothing.

Explanation:

The computation is shown below:

As we know that

The Opportunity cost of production is

= Change in the production of second good ÷ Change in the production of the good

Based on this, the opportunity costs are as follows

For East:

= (12 - 8) ÷ (8 - 0)

= 4 ÷ 8

= 0.5 Clothing

For West:

= (15 -10) ÷ (15-0)

= 5 ÷ 15

= 1 ÷ 3 clothing

Now For West 10 units of food is

= 10 × (1 ÷ 3)

= 10 ÷ 3 units of cloth.

And  For West 15 units of food:

= 15 × (1 ÷ 3)

= 5 units of cloth

Hence the correct option is b.