12. If Portugal has a total of 120 man-hours of resources available for production, while England has only 90, what are the relative price (opportunity cost) of cloth in Portugal, before trade begins? a) 1/2 yard of cloth b) 2 man-hours/bottle c) 1/3 bottle of wine d) 2 bottles of wine e) 3 bottles of wine PortugalEngland9090808070706060CPF5050 +40403030CPFPPF20PPF2010 -10O 10 20 30 40 50 60O 10 20 30 40 50 60clothclothwine

Answered: If Portugal has a total of 120…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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12. If Portugal has a total of 120 man-hours of resources available for production, while England has only 90, what are the relative price (opportunity cost) of cloth in Portugal, before trade begins?

		a) 1/2 yard of cloth
		b) 2 man-hours/bottle
		c) 1/3 bottle of wine
		d) 2 bottles of wine
		e) 3 bottles of wine

Portugal
England
90
90
80
80
70
70
60
60
CPF
50
50 +
40
40
30
30
CPF
PPF
20
PPF
20
10 -
10
O 10 20 30 40 50 60
O 10 20 30 40 50 60
cloth
cloth
wine

Expert Solution

Step 1

The relative price of a good or service is the price of that good or service compared to the price of other goods or services. In other words, it is the price of a good or service relative to the prices of other goods or services in the economy.

Given graph for Portugal:

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