Use the following to answer questions :
Figure: Bicycles and Radishes I
-(Figure: Bicycles and Radishes I) Look at the figure Bicycles and Radishes I. It shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. Suppose country A discovers a new technology that greatly increases its ability to produce bicycles but has no effect on its ability to produce radishes. This would:
A)lower the opportunity cost of producing radishes in country A.
B)increase the opportunity cost of producing radishes in country A.
C)not affect the opportunity cost of producing radishes in country A.
D)increase the opportunity cost of producing radishes in country B.

Question

Use the following to answer questions :
Figure: Bicycles and Radishes I 
-(Figure: Bicycles and Radishes I) Look at the figure Bicycles and Radishes I. It shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. Suppose country A discovers a new technology that greatly increases its ability to produce bicycles but has no effect on its ability to produce radishes. This would:
A)lower the opportunity cost of producing radishes in country A. 
B)increase the opportunity cost of producing radishes in country A. 
C)not affect the opportunity cost of producing radishes in country A. 
D)increase the opportunity cost of producing radishes in country B.

Quizplus · Accepted Answer

The new technology increases the ability to produce bicycles in country A, making bicycles relatively cheaper to produce compared to radishes. This increases the opportunity cost of producing radishes, as more bicycles could be produced instead.

Use the Following to Answer Questions