On Frontier of New ‘Gold Rush’

EconEye Admin

3 years ago

Guinea, in West Africa, has the world’s biggest bauxite reserves, the main source of aluminum for electric vehicles. More than 200,000 acres of farmland will be destroyed by bauxite mining. Runoff from mines is destroying many rivers and fishermen draw in hauls so small they can barely make a living.—washingtonpost.com

Answer the following questions to check your understanding of the story.

1) How is the increase in the production of bauxite illustrated when Guinea’s production possibilities frontier measures food production on the y-axis and bauxite production on the x-axis?

a) By a movement from a point on the PPF to a point outside the PPF.

b) By a movement from a point inside the PPF to a point on the PPF.

c) By the PPF rotating outward.

d) By a movement downward along the PPF.

Wrong! - When Guinea produces more bauxite, how does its food production change? How does the PPF illustrate this change in production?

Good Job! - When Guinea produces more bauxite, it produces less food. This is illustrated by a movement downward along the PPF.

2) What is Guinea’s opportunity cost of bauxite?

The opportunity cost of bauxite is ____________.

a) fishermen who can barely make a living

b) a decrease in Guinea’s bauxite reserves

c) the increase in electric vehicle production

d) food forgone

Wrong! - Guinea’s opportunity cost of bauxite is the highest-valued alternative forgone. What is Guinea’s highest-valued alternative forgone when it mines bauxite?

That's Right! - Guinea’s opportunity cost of bauxite is the highest-valued alternative forgone. When Guinea mines bauxite, it produces less food because less land is available for farmers and the destruction of rivers decreases the quantity of fish available.

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