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Edit View History Bookmarks Window Help ECON-2302-65400 (1152273) monica granados&1 615/18 1215 PM Test: Exam 1 (Chapters 1-4) Time Remaining: 01:48:22 Submit Test This Question: 1 pt 23 of 50 (22 complete) This Test: 50 pts possible Drought affected farmers face new battle Wheat farmers who had been struggling with a long drought now face a new battle A South American weed called serrated tussock was spreading at a rapid rate 0ssthe bare eart ofthese dro n-stricken wheat farms. And a major problem isthdt many wheat farmers arot dstrush serrated tasock to, native tussock and are unaware of the large effect that serrated tussock can have on productivity and growing capacity less harm Souroe: ABC News (Austraia), May 18, 2009 Australia is a major exporter of wheat. ir productivity on Australian wheat tarms decreases, what happens to the opportunity cost of producing wheat in Australia and to the quantity of wheat that Australia exports? If productivity on Australian wheat farms does decrease, he tall in productivity The quantity of wheat Australis exports t the opportunity cost of producing wheat in Australia. O A increases; increases O B. decreases, decreases O C. increases; decreases O D. decreases; increases O E. increases, does not change Cick to select your answver

Solution

The productivity of Australia wheat farms decreases that is more labor needs to produce the same amount of wheat. Opportunity cost refers to what we give up to get an item. So now Australia have to give up more to produce 1 unit of wheat, thus opportunity cost of producing wheat is increased.

As opportunity cost is increased, it becomes costly to produce wheat in Australia. So export will be reduced.

Option B is correct.