economics paper 1

[Anchelle]

hi,anybody can explain to me why the 22th question in Mayjune2004 is the answer B? how to calculate it?

 

[Moiz]

The exchange rate should be between the opp. cost ratios

For country 1 its: 1X=2Y
For country 2 its: 1X=1.3Y

so 1X=1.5Y is between the opp cost ratios

 

[HighGrades]

correct moiz!