Figure 18.2
-Refer to Figure 18.2.The terms of trade for Pizzaland is:

Question

Quizplus · Accepted Answer

To find the terms of trade, we need to compare the opportunity costs of producing tomatoes and cheese in Pizzaland. The opportunity cost of producing 1 tomato is 0.4 cheese (10 cheeses/25 tomatoes) while the opportunity cost of producing 1 cheese is 2.5 tomatoes (25 tomatoes/10 cheeses). Therefore, the terms of trade for Pizzaland is 1 tomato for 0.4 cheese.

Figure 18.2 -Refer to Figure 18.2.The Terms of Trade for Pizzaland Is