Table 9-6
Output per hour Production and Production
of work Consumption without Trade with Trade

Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.What is the opportunity cost to produce 1 clock in Denmark?
A)1/6 of a hat
B)1/2 of a hat
C)2 hats
D)6 hats

Question

Table 9-6
Output per hour Production and Production
of work Consumption without Trade with Trade
  
Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.What is the opportunity cost to produce 1 clock in Denmark?
A)1/6 of a hat 
B)1/2 of a hat 
C)2 hats 
D)6 hats

Quizplus · Accepted Answer

To produce 1 clock in Denmark, they must give up the production of 1/2 a hat, which is the opportunity cost.

The best choice(s) for Denmark would be to specialize in the production of clocks and trade with Belize for hats. Denmark has a comparative advantage in the production of clocks, as its opportunity cost of producing 1 clock (1/2 a hat) is lower than Belize's opportunity cost of producing 1 clock (2 hats). By specializing in the production of clocks, Denmark can produce 150 clocks and trade them for 75 hats with Belize, resulting in both countries being better off.

Table 9-6 Output Per Hour Production and Production