England has a relatively cool and cloudy climate that is ill suited for grape growing. It can produce 200 units of wine for every 400 units of cloth. Portugal, in contrast, has a relatively warm and sunny climate that is good for growing grapes. It can produce 200 units of wine for every 100 units of cloth. Which country has the higher opportunity cost of producing cloth?
A. Portugal: 2 units of wine for every unit of cloth
B. England: 2 units of wine for every unit of cloth
C. Portugal: 1/2 unit of wine for every unit of cloth
D. England: 1/2 unit of cloth for every unit of wine
Answer:A
England has a relatively cool and cloudy climate that is ill suited for grape growing. It can produce 200 units of wine for every 400 units of cloth. Portugal, in contrast, has a relatively warm and sunny climate that is good for growing grapes. It can produce 200 units of wine for every 100 units of cloth. Which country has the higher opportunity cost of producing cloth?
A. Portugal: 2 units of wine for every unit of cloth B. England: 2 units of wine for every unit of cloth C. Portugal: 1/2 unit of wine for every unit of cloth D. England: 1/2 unit of cloth for every unit of wine
Explanation: The opportunity cost for England in producing 1 unit of cloth is 1/2 unit of wine. The opportunity cost for Portugal of producing 1 unit of cloth is 2 units of wine. Therefore, Portugal has the higher opportunity cost.