The nation of Leisureland can produce two goods: bicycles and bowling balls.The western region of Leisureland can, if it devotes all its...

The nation of Leisureland can produce two goods: bicycles and bowling balls.

The western region of Leisureland can, if it devotes all its resources to bicycle production, produce 100 bicycles per month. Alternatively, it could devote all its resources to bowling balls and produce 400 per month. Western Leisureland could also produce any combination of bicycles and bowling balls lying on a straight line between these two extremes.

The eastern region of Leisureland can, if it devotes all its resources to bicycle production, produce 400 bicycles per month. Alternatively, it could devote all its resources to bowling balls and produce 100 bowling balls per month. Eastern Leisureland could also produce any combination of bicycles and bowling balls lying on a straight line between these two extremes.


a) What it is the opportunity cost of producing an additional bowling ball measured in terms of forgone bicycles in western Leisureland?

b) What is the opportunity cost of producing an additional bowling ball measured in terms of forgone bicycles in eastern Leisureland?

c) Explain the difference in opportunity cost between western and eastern Leisureland. Which region has a comparative advantage in producing bowling balls? Bicycles?

d) Suppose it is determined that 400 bicycles must be produced. How many bowling balls can be produced?

e) Where will these goods be produced?

Expert Answers
teachsuccess eNotes educator| Certified Educator

Remember that eNotes 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.