If Texia specializes in food, it can produce 1,000 units of food and 0 units of clothing this year. Ifit specializes in clothing, it can produce 500 units of clothing and 0 units of food. This year Urbania can produce either 500 units of food and 0 units of clothing or 200 units of clothing and 0 units of food (assume linear production possibility frontiers)

a) Texia; Texia
b) Texia; Urbania
c) Urbania; Texia
d) Urbania; Urbani

(B) Texia; Urbania

Explanation:Production possibilities frontiers or production possibility curve is a term used to describe the maximum output that an organisation can achieve if it efficiently uses all available resources to produce a product mix containing two products.

Below is the

Clothing Opportunity Cost

Food given out/Clothing gained = Texia =( -(10/5) = -2 < Urbania = -(6/2) = -3)

TEXIA WILL BE MORE EFFICIENT IN GIVING URBANIA CLOTHES.

Food Opportunity Cost=

Clothing given out/Food gained = Texia = (-(5/10) = -1/2 > Urbania = -(2/6) = -1/3)

URBANIA WILL GIVE FOOD TO TEXIA.

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