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Unformatted text preview: else would have been greater than the relative price of everything else o (from the opposite perspective) because at such a point, the opportunity cost of sugar would have been less than the relative price of sugar Why did Bill and Colleen completely specialize in one good? x A country should completely specialize in the production of one good o ONLY if the relative price of that good is greater than the countrys opportunity cost of producing it at every point along the PPF o Bill and Colleens opportunity cost was constant all along their PPFs x the PPF I drew for Cuba assumes increasing opportunity cost i.e. Cubas opportunity cost of producing sugar increases as it produces more sugar Page 31...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10