Comparative and Absolute Advantage Quick Check

Question

3 of 53 of 5 Items
Question
At most, a country could produce 20,000 units of Good A or 5,000 units of Good B. What is the opportunity cost of producing one unit of Good B in terms Good A?(1 point)
Responses

4 units of Good B
4 units of Good B

14
unit of Good B
1 fourth unit of Good B

14
unit of Good A
1 fourth unit of Good A

4 units of Good A

Answer 1

To determine the opportunity cost of producing one unit of Good B in terms of Good A, we can use the production possibilities given.

• If the country produces 20,000 units of Good A, it foregoes the production of Good B (5,000 units).

The opportunity cost can be calculated as follows:

1. If the country produces 20,000 units of Good A, it can produce 5,000 units of Good B.
2. Therefore, producing 5,000 units of Good B would mean giving up 20,000 units of Good A.

To find the opportunity cost of producing one unit of Good B, we can divide the total units of Good A given up (20,000) by the total units of Good B produced (5,000):

\[ \text{Opportunity Cost of 1 unit of Good B} = \frac{20,000 , \text{units of Good A}}{5,000 , \text{units of Good B}} = 4 , \text{units of Good A} \]

Thus, the opportunity cost of producing one unit of Good B is 4 units of Good A.