Answer to Question #286601 in Microeconomics for zuli

Question

Greenland and Blueland are countries that produce only tools and wine. Assume each country has 10000 labor hours available per month. With the available technologies Greenland can produce each unit of tools in 2.5 hours and 1 liter of wine in 5 hours, while Blueland can produce each unit of tools in 4 hours and 1 liter of wine in 5 hours. 

What is the opportunity cost of 1 liter of wine and 1 unit of tools in Greenland and Blueland. 

Answer 1

Greenland can produce both goods at a lower cost than England. But since its resources are limited, it makes sense to focus on producing a product that is more profitable.

In this example, using 2?5 hours Greenland can produce one instrument unit. Blurand it will take 5 hours to produce wine. When exchanging products, if the ratio is 1:1, Blurand receives tools and receives wine, saving 1.5 hours.