Difficulty: Easy

Average Score: 100%

Trade and Opportunity Costs
This passage and table describe the opportunity costs faced by two countries.
1 The countries of Grand Coast and Toland are trading partners. The two main goods
traded are timber and fish. Every year the ministers of trade from each country
attend an international conference to discuss issues related to foreign trade and
decide how each country should specialize. The table provides economic data for
one year.

In Cartoon 2, the two-faced figure attempts to convince American laborers to support tariffs by appealing to their

Rationale

Opportunity cost of one unit of fish in Grand Coast is ½ unit of timber.

The concept of opportunity cost represents the value of the next best alternative foregone when a decision is made. In this context, the opportunity cost of producing one unit of fish in Grand Coast is calculated as the amount of timber that could have been produced instead.

A (fear that foreign workers would work for lower wages.) CORRECT

This choice correctly identifies the opportunity cost of one unit of fish in Grand Coast. For every unit of fish produced, Grand Coast gives up the opportunity to produce ½ unit of timber, as shown by the table data representing the trade-offs between fish and timber production.

B (desire to prove that American-made products were superior to products made by foreign workers.) YOUR ANSWER

This option does not represent the opportunity cost accurately. The correct relationship between fish and timber production in Grand Coast, as per the data provided, indicates that the opportunity cost of one unit of fish is equivalent to ½ unit of timber, not 5 units.

C (fear that foreign workers would bring radical political ideas.) YOUR ANSWER

This choice inaccurately describes the opportunity cost. Opportunity cost reflects the value of the next best alternative foregone, which, in this case, is the amount of timber that could have been produced instead of one unit of fish, not the quantity of fish itself.

D (desire to share the American standard of living with foreign workers.) YOUR ANSWER

This option does not align with the concept of opportunity cost presented in the passage. The opportunity cost of producing one unit of fish in Grand Coast is the amount of timber that could have been produced instead, which is represented as ½ unit of timber in the economic data provided.

Conclusion

Understanding opportunity cost is crucial in decision-making, especially in the context of international trade and resource allocation. In Grand Coast, the opportunity cost of one unit of fish is accurately represented as ½ unit of timber, highlighting the trade-off between the production of these two goods. This relationship guides countries in determining their specialization to maximize efficiency and benefits in trade partnerships.

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