08. What are the relative prices (opportunity costs) of wine and cloth? a) wine costs 1/2 yard of cloth per bottle in England b) cloth costs 1/2 bottle of wine/yard in England c) cloth costs 4 man-hours/yard in Portugal d) cloth costs 2 bottles of wine/yard in Portugal e) wine costs 3 bottles of wine/yard in Portugal PortugalEngland90908080707060605050PPF4040PPF303020201010 +1020304050 60102030405060clothclothwinewine

Answered: What are the relative prices…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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08. What are the relative prices (opportunity costs) of wine and cloth?

		a) wine costs 1/2 yard of cloth per bottle in England
		b) cloth costs 1/2 bottle of wine/yard in England
		c) cloth costs 4 man-hours/yard in Portugal
		d) cloth costs 2 bottles of wine/yard in Portugal
		e) wine costs 3 bottles of wine/yard in Portugal

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

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In portugal the production of cloth requires double man-hoirs than the wine while in England both cloth and wine need same man-hour for 1 unit of the production.

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