Question

venice florence pasta (pounds) wine (bottles) pasta (pounds) wine (bottles) 200 0 50 0 100 25 25 50 0 50 0 100 instructions: in parts b and d, round your answers to two decimal places. a. what is venices opportunity cost of producing one pound of pasta? 0.25 bottle(s) of wine 2 bottle(s) of wine 0.5 bottle(s) of wine 4 bottle(s) of wine b. what is venices opportunity cost of producing one bottle of wine? pound(s) of pasta c. what is florences opportunity cost of producing one pound of pasta? 4 bottle(s) of wine 0.5 bottle(s) of wine 0.25 bottle(s) of wine 2 bottle(s) of wine

Explanation:

Step1: Find Venice's production tradeoff

Venice can produce 200 pounds of pasta (0 wine) or 50 bottles of wine (0 pasta). To find opportunity cost of 1 pasta, calculate $\frac{50}{200}$.

Step2: Calculate Venice's pasta opportunity cost

$\frac{50}{200} = 0.25$ bottles of wine.

Step3: Find Venice's wine opportunity cost

Opportunity cost of 1 wine is $\frac{200}{50} = 4.00$ pounds of pasta.

Step4: Find Florence's production tradeoff

Florence can produce 50 pounds of pasta (0 wine) or 100 bottles of wine (0 pasta). Calculate $\frac{100}{50}$ for pasta opportunity cost.

Step5: Calculate Florence's pasta opportunity cost

$\frac{100}{50} = 2$ bottles of wine.

Answer:

a. 0.25 bottle(s) of wine
b. 4.00
c. 2 bottle(s) of wine