Answer to Question #59665 in Microeconomics for Alan

Question

1. An economy produces only agricultural products (x) and manufactured goods (y). A quarter of
the land in the country is arid and not suitable for agricultural products. Therefore, if half of the
arid land is not used at all:


(a) The economy could be productively efficient when the opportunity cost of x (agricultural
products) is infinite;

(b) The economy could be productively efficient when the opportunity cost of y (manufactured
goods) is zero;

(c) The economy could be productively inefficient with infinite opportunity cost for the
production of x (agricultural products);

(d) The economy could be productively inefficient with infinite opportunity cost for the
production of y (manufactured goods).

Answer 1

If an economy produces only agricultural products (x) and manufactured goods (y) and quarter of the land in the country is arid and not suitable for agricultural products. So, if half of the arid land is not used at all, then the economy could be productively efficient when the opportunity cost of y (manufactured goods) is zero.
So, the right answer is b.