A-LevelEconomicsBasic economic ideas and resource allocation9708/12 · Oct/Nov 2009 · Q181 Mark
A country has the correct climate for growing tea, which is produced very cheaply and exported. Fruit is also grown, but this costs more as the climate is not as suitable. Fruit can be sold at a higher price than tea so some of the land used for tea is switched to fruit. What will definitely happen as a result?
AThere will be an increase in specialisation by the country.
BThere will be an increase in the imports of tea.
CThere will be an opportunity cost of the loss of the tea production.
DThere will be production in line with absolute advantage.
✓ Correct answer
C: There will be an opportunity cost of the loss of the tea production.
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