Question

If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that:

a. If he devotes all of his available resources to watermelon production, then he can produce 80 watermelons.
b. He cannot have comparative advantage over other farmers in producing cantaloupes.
c. His opportunity cost of one watermelon is 2/3 of a cantaloupe.
d. His production possibilities frontier is bowed-out.

In a recession, the trade balance often improve because:

a. Service exports exceed manufactured good exports
b. Banks sell depressed assets
c. Fewer households can afford luxury imports
d. The capital account exceeds the current account

Answer 1

C. His opportunity cost of one watermelon is 2/3 of a cantaloupe.

c. Fewer households can afford luxury imports

Explanation:

Opportunity cost is the profit lost when one alternative is selected over another. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision. If he dicides to sacrifice one watermelon for 2/3 of a cantaloupe that is the profit lost over that alternative.

Recession is a state of decline in the general productive economic activities of a country or an economy, it is also the state of an economy people buying fewer luxury imports allows their money to stay in their economy and could improve trade balance

Answer 2

C. His opportunity cost of one watermelon is 2/3 of a cantaloupe.

c. Fewer households can afford luxury imports

Step-by-step explanation: Opportunity Cost is an economic term used to describe the benefits or profits which a person or an investor gives up in order to make choice between alternatives.

Recession is a term used in economics to refer a state of decline in the general productive economic activities of a country or an economy, it is also the state of an economy where the Gross domestic product (GDP) growth is in the negative.