Question

Suppose that France and Germany each produce wheat and cars. By using all available resources and technology, France can produce at most 30 units of wheat and 12 cars per year, and Germany can produce at most 25 units of wheat and 15 cars per year. Suppose that, to protect the domestic car industry, the government of France decides that France will produce 6 cars per year. Assuming that opportunity costs are constant, at most how many units of wheat can France produce?

Answer 1

15

Step-by-step explanation:

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

For France, the opportunity cost of producing one car = 30/12 = 2.5 wheats

If the production of cars is fixed at 6 cars per year, the highest amount of wheat that would be produced = 2.5 x 6 = 15