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Country X Country Y WATCHES WATCHES 10 10 RADIOS 20 RADIOS 3. Using equal amounts of labor hours, Country X and Country Y can

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Answer #1

Country X:

Opportunity cost of producing 1 radio = 20/10 = 2 watches

Country Y:

Opportunity cost of producing 1 ratio = 10/20 = 0.5 watches

Option c is correct

Exchanging 1 watch for 1 radio would bring gains to both countries (this price ratio lies between the opportunity costs of both countries)

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