Table 5 shows the current output levels of Wool and Cotton for Australia and New Zealand. Table 5. Output per year Using the data from Table 5, (a) (b) Australia New Zealand (c) Wool (million tons) 14 22 Cotton (million tons) 24 10 Calculate Australia's opportunity cost of producing one ton of a. Wool b. Cotton Calculate New Zealand's opportunity cost of producing one a. Wool b. Cotton If both countries intend to specialise and trade, explain which country should specialise in producing wool and which country should specialise in producing cotton; and show how both countries can benefit from trade.
Table 5 shows the current output levels of Wool and Cotton for Australia and New Zealand. Table 5. Output per year Using the data from Table 5, (a) (b) Australia New Zealand (c) Wool (million tons) 14 22 Cotton (million tons) 24 10 Calculate Australia's opportunity cost of producing one ton of a. Wool b. Cotton Calculate New Zealand's opportunity cost of producing one a. Wool b. Cotton If both countries intend to specialise and trade, explain which country should specialise in producing wool and which country should specialise in producing cotton; and show how both countries can benefit from trade.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:QUESTION 6
Table 5 shows the current output levels of Wool and Cotton for Australia and New Zealand.
Table 5. Output per year
Using the data from Table 5,
(a)
(b)
Australia
New Zealand
(c)
Wool
(million tons)
14
22
Cotton
(million tons)
24
10
Calculate Australia's opportunity cost of producing one ton of
a. Wool
b. Cotton
Calculate New Zealand's opportunity cost of producing one
a. Wool
b. Cotton
If both countries intend to specialise and trade, explain which country should
specialise in producing wool and which country should specialise in producing cotton;
and show how both countries can benefit from trade.
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