Exhibit 28-2 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 28-2.Which of the following would be mutually beneficial terms of trade between Karl and Adam?

Question

Quizplus · Accepted Answer

Karl's opportunity cost for 1 ton of apples is 2 tons of oranges, and Adam's is 1/2 ton of oranges. A mutually beneficial trade would be between these opportunity costs, such as 1 ton of apples for 1 1/2 tons of oranges.

Exhibit 28-2 Karl Can Produce Either 10 Tons of Oranges