Assignment#1
Numerical Problems:
4. The exhibits below describe the production possibilities for Germany and Turkey.
Germany
Optical Instruments per year
350
300
250
200
150
100
50
0
0
200
400
600
800
1000
T-Shirts per year
Optical Instruments per year
Turkey
600
500
400
300
200
100
0
0
50
100
150
200
250
T-Shirts per year
a. What is the slope of Germany’s production possibilities curve?
Answer: The slope of Germany’s production possibilities curve is -0.33.
300
b. What is the slope of Turkey’s production possibilities curve?
Answer: The slope of Turkey’s production possibilities curve is -2.
c. What is the opportunity cost of producing T-shirts in Germany?
Answer: The opportunity cost of producing T-shirts in Germany is 0.3.
d. What is the opportunity cost of producing T-shirts in Turkey?
Answer: The opportunity cost of producing T-shirts in Turkey is 2
e. What is the opportunity cost of producing optical instruments in Germany?
Answer: The opportunity cost of producing optical instruments in Germany is 3.
f. What is the opportunity cost of producing optical instruments in Turkey?
Answer: The opportunity cost of producing optical instruments in Germany is 0.5.
g. In which good does Germany have a comparative advantage?
Answer: Germany have a comparative edge in production of T-Shirts.
h. In which good does Turkey have a comparative advantage?
Answer: Turkey have a comparative edge in production of optical instruments.