Comparative and Absolute Advantage Quick Check

Question

5 of 55 of 5 Items

Question
A country produces books and video games exclusively. In the same time it takes to produce one video game, the country could produce 4 books. If the country only focused on one of the goods to produce, the maximum amount the country can produce is either 200 video games or 800 books. They can create a combination of the two goods, but the opportunity cost for production will remain the same. If the country would like to consume a combination of 100 video games and 1,400 books, which of the following is true?(1 point)
Responses

It is impossible for the country to consume a combination of 100 video games and 1,400 books.
It is impossible for the country to consume a combination of 100 video games and 1,400 books.

The country might consume 100 video games and 1,400 books following trade.
The country might consume 100 video games and 1,400 books following trade.

This is only possible if the country produces 600 more books and 100 fewer video games itself.
This is only possible if the country produces 600 more books and 100 fewer video games itself.

The country can produce 600 more books and 100 fewer video games itself, or it can engage in trade.

Answer 1

To analyze whether the country can consume 100 video games and 1,400 books, let’s first break down the production capabilities based on the information provided.

1. Production Capacity:

   • If the country focuses on video games, it can produce a maximum of 200 video games.
   • If it focuses on books, it can produce a maximum of 800 books.

2. Opportunity Cost:

   • In the time it takes to produce 1 video game, the country could produce 4 books.
   • Therefore, the opportunity cost of producing 1 video game is 4 books.

3. Combination of Goods:

   • To create the combination of 100 video games and 1,400 books, we need to check if this is feasible within the production limits.

   • Producing 100 video games will cost 400 books (because the opportunity cost is 4 books per video game).

   • Therefore, total book production needed would be equal to books produced (1,400) + books lost (400) = 1,800 books.

4. Comparing Production Needs with Capacity:

   • The maximum production of books the country can produce is 800 books. Thus, producing 1,800 books isn't possible for the country.

Based on this analysis, the correct response is:

It is impossible for the country to consume a combination of 100 video games and 1,400 books.