Suppose that in Belize, the opportunity cost of producing a ...

[corkyiscool3328]

Suppose that in Belize, the opportunity cost of producing a sailboat is 5 hang gliders. In Honduras, the opportunity cost of producing a sailboat is 8 hang gliders.
 
  a. What is the opportunity cost of producing a hang glider for Belize?
  b. What is the opportunity cost of producing a hang glider for Honduras?
  c. Which country has a comparative advantage in the production of hang gliders?
  d. Which country has a comparative advantage in the production of sailboats?

Question 2

A goal of market-based reforms of the health care system is to give patients an incentive to pay more attention to the prices of medical services. This would tend to ________ economic efficiency by ________ the costs of medical services
 
  A) increase; increasing B) decrease; increasing
  C) increase; decreasing D) decrease; decreasing

[cassie_ragen]

Answer to Question 1

a. For Belize, the opportunity cost of producing a hang glider is 1/5 of a sailboat.
b. For Honduras, the opportunity cost of producing a hang glider is 1/8 of a sailboat.
c. Honduras has a comparative advantage in the production of hang gliders.
d. Belize has a comparative advantage in the production of sailboats.

Answer to Question 2

C