Visualize a PPF (Production Possibility Frontier/Curve) for two countries the United States and Taiwan.  Both countries produce YO-YOs and Tennis Shoes.  The PPF for the United States shows that on the X-Axis its Output for YO-YOs is 100 million (per year) and Y-Axis its Output for Tennis Shoes is 25 million (per year). The PPF for Taiwan shows that on the X-Axis its Output for YO-YOs is 20 million (per year) and Y-Axis its Output for Tennis Shoes is 10 million (per year).   Considering the PPFs for both countries, the opportunity cost of producing 1 yo-yo in Taiwan is:     Answers: A.  2 pairs of tennis shoes.   B.  One-half of a yo-yo.   C.  Greater than the opportunity cost in the United States.   D.  Equal to the opportunity cost of producing 1 yo-yo in the U.S.

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter2: Economic Tools And Economic Systems
Section: Chapter Questions
Problem 3.5P
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Visualize a PPF (Production Possibility Frontier/Curve) for two countries the United States and Taiwan.  Both countries produce YO-YOs and Tennis Shoes. 

The PPF for the United States shows that on the X-Axis its Output for YO-YOs is 100 million (per year) and Y-Axis its Output for Tennis Shoes is 25 million (per year).

The PPF for Taiwan shows that on the X-Axis its Output for YO-YOs is 20 million (per year) and Y-Axis its Output for Tennis Shoes is 10 million (per year).

 

Considering the PPFs for both countries, the opportunity cost of producing 1 yo-yo in Taiwan is:

   

Answers:

A. 

2 pairs of tennis shoes.

 

B. 

One-half of a yo-yo.

 

C. 

Greater than the opportunity cost in the United States.

 

D. 

Equal to the opportunity cost of producing 1 yo-yo in the U.S.

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