Exhibit
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.
-Refer to Exhibit. Which of the following is true?

Question

Quizplus · Accepted Answer

Karl's opportunity cost for 1 ton of apples is 2 tons of oranges, and Adam's opportunity cost for 1 ton of oranges is 2 tons of apples. Both exchange rates (1 ton of apples to 1.5 tons of oranges and 1 ton of oranges to 1.5 tons of apples) fall between their respective opportunity costs, allowing for mutually beneficial trade.

Exhibit Karl Can Produce Either 10 Tons of Oranges or 5