Figure 3-14
Arturo's Production Possibilities Frontier
Dina's Production Possibilities Frontier
-Refer to Figure 3-14.Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo.Which of the following combinations of tacos and burritos could Dina then consume,assuming Dina specializes in taco production and Arturo specializes in burrito production?
A)100 tacos and 200 burritos
B)200 tacos and 130 burritos
C)300 tacos and 60 burritos
D)340 tacos and 40 burritos

Question

Figure 3-14
Arturo's Production Possibilities Frontier
Dina's Production Possibilities Frontier  
-Refer to Figure 3-14.Suppose Arturo is willing to trade 6 burritos to Dina for each 10 tacos that Dina produces and sends to Arturo.Which of the following combinations of tacos and burritos could Dina then consume,assuming Dina specializes in taco production and Arturo specializes in burrito production?
A)100 tacos and 200 burritos 
B)200 tacos and 130 burritos 
C)300 tacos and 60 burritos 
D)340 tacos and 40 burritos

Quizplus · Accepted Answer

According to the information given, Dina is willing to trade 10 tacos to Arturo in exchange for 6 burritos. This implies that the opportunity cost of producing 10 tacos for Dina is 6 burritos. 
To determine the combination of tacos and burritos that Dina could consume, we need to find the point where her production possibilities frontier (PPF) intersects with Arturo's PPF. 
The intersection point is where they would exchange goods. We can see from the graph that the best point of exchange is at 300 tacos for Dina and 60 burritos for Arturo. 
At this point, Dina would have given up 180 burritos (6 burritos for each 10 tacos) to produce 300 tacos. She would have traded these 180 burritos with Arturo, who would have given her 100 tacos in exchange. 
Therefore, Dina would have 300 tacos to consume (100 produced + 200 traded) and 60 burritos to consume (200 produced - 180 traded). Hence, the correct answer is choice C.

Figure 3-14 Arturo's Production Possibilities Frontier