QUESTION 18 Assume that Geeta and Luke can switch between pr

QUESTION 18 Assume that Geeta and Luke can switch between producing shoe box and producing cat condo at a constant rate. Labor Hours Needed to Make Cat Condo Quantity Produced in 36 Hours Shoe Box Shoe Box 18 18 Cat Condo Geeta Luke Refer to Table. The opportunity cost of I shoe box for Luke is O a. 1/3 cat condo. b. 1/2 cat condo. O c. 3 cat condo. d. 6 cat condo.

Solution

Ans 18)

Luke can make 1 shoe in 2 hours where as it needs 4hours to make 1 cat condo hence opportunity cost for 1 shoe is 2/4 cat condos he would have made in 1 hour because an opportunity cost is spending 1 hour of production on making shoe and how many quantities of Cat condo would have been made by him

Hence our answer is 1/2 Cat Condos ( Option B)

Ans 5

At Price $15 we can see that quantity demanded is higher than quantity supplied therefore when Price is $15 we would face shortage and that is mere the difference between Quantity Demanded and Quantity Supplied

=Shortage of (700-400) 300 units

Option C is correct response

Ans

Opprotunity Cost for Falda for wheat is lower than that of Varick whereas Opportuity Cost for Varick is lower for Cloth hence both of them have comparative advantages

Option D is correct response