2. As we know, the opportunity cost of a product can be thought of as what must be given up to produce another unit.

   If we examine the table to the right for Country 1 we see that each time it increases computer production by 10 computers, burrito production falls by 30. For example, when Country 1 is producing 20 computers it can produce 90 burritos, but if it increases production to 30 computers, maximum burrito production falls to 60 and so on. 30 burritos given up for 10 computer or 30/10 = 3. This means, however, that the opportunity cost of a burrito is only 1/3 computers. We can see this by noting that if Country 1 is producing 90 burritos and increases output to 120 burritos, computer production only falls from 20 to 10, or 10 computers for 30 burritos or 10/30 = 1/3.

   In Country 2 the opportunity cost of a burrito is one computer and vice versa. Increasing computer output from 40 to 60 decreases burrito output from 60 to 40 or 20 burritos for 20 computers 20/20 = 1 and it's the same for burritos. Thus, only answer c. is correct. (Throughout this section and in these questions, we consider only PPFs which are straight lines, meaning opportunity cost is constant at all levels of output. This is done for simplicity, but realistically, in most cases, opportunity costs would change as outputs change.)

Country 1 Country 2
Burr. Comp. Burr. Comp.
150 0 100 0
120 10 80 20
90 20 60 40
60 30 40 60
30 40 20 80
0 50 0 100


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