Remember that policy allows for only one question per post (or two, if they are short). With that in mind, I will answer three out of the five questions.
a) What it is the opportunity cost of producing an additional bowling ball measured in terms of forgone bicycles in western Leisureland?
For the graph, I will use the y-axis (vertical axis) for bicycles and the x-axis (horizontal axis) for bowling balls. The paragraph states that western Leisureland can produce 100 bicycles a month (if it produces nothing else). It also states that western Leisureland can produce 400 bowling balls a month (if it produces nothing else).
Since we need to produce an additional bowling ball, we will need to forego a certain number of bicycles to do so. The opportunity cost is the tradeoff from producing one more bowling ball.
400 bowling balls=100 bicycles.
Divide by 400 on both sides.
1 bowling ball= 1/4 bicycle.
What this means is that, for every extra bowling ball western Leisureland produces a month, it will have to forego producing 1/4 of a bicycle (the opportunity cost).
b) What is the opportunity cost of producing an additional bowling ball measured in terms of forgone bicycles in eastern Leisureland?
Eastern Leisureland can either produce 400 bicycles a month or 100 bowling balls a month. Since we need to produce an additional bowling ball, we will need to forego producing a certain number of bicycles. Again, the opportunity cost is the tradeoff from producing one extra bowling ball.
100 bowling balls=400 bicycles.
Divide both sides by 100.
1 bowling ball=4 bicycles.
So, for every extra bowling ball eastern Leisureland produces a month, it will have to forego producing 4 bicycles (the opportunity cost).
c) Explain the difference in opportunity cost between western and eastern Leisureland. Which region has a comparative advantage in producing bowling balls? Bicycles?
From the above, we can see that western Leisureland has a comparative advantage in producing bowling balls. In order to produce an extra bowling ball, it will only have to forego producing 1/4 of a bicycle.
400 bowling balls= 100 bicycles.
Divide both sides by 400.
1 bowling ball= 1/4 bicycle.
On the other hand, for every bowling ball eastern Leisureland produces, it must forego producing 4 bicycles.
100 bowling balls= 400 bicycles.
Divide both sides by 100.
1 bowling ball= 4 bicycles.
Therefore, it's cheaper to produce bowling balls in western Leisureland. Western Leisureland is said to have a comparative advantage in producing bowling balls.
Meanwhile, eastern Leisureland has a comparative advantage in producing bicycles. For every extra bicycle it produces, it will only have to forego producing 1/4 of a bowling ball.
400 bicycles=100 bowling balls
Divide both sides by 400.
1 bicycle= 1/4 bowling ball.
On the other hand, for every extra bicycle western Leisureland produces, it will have to forego producing 4 bowling balls.
100 bicycles=400 bowling balls.
Divide both sides by 100.
1 bicycle= 4 bowling balls.
Therefore, eastern Leisureland is said to have a comparative advantage in producing bicycles.
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