Question

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

Answer 1

Answer:

The Portugal has higher opportunity cost of producing cloth

Explanation:

Data provided in the question:

For England :

Opportunity cost of producing cloth

= (Units of cloth that can be produced) ÷ (Units of wine that can be produced )

= 200 ÷ 400

= 0.5 cloth per wine

For Portugal :

Opportunity cost of producing cloth

= (Units of cloth that can be produced) ÷ (Units of wine that can be produced )

= 200 ÷ 100

= 2 cloth per wine

Hence,

The Portugal has higher opportunity cost of producing cloth