The opportunity cost of a table is 5 chairs in nation A and 4 chairs in nation B.If the nations specialize and trade,an acceptable terms of trade for both nations would be 3 chairs per table.

Question

Quizplus · Accepted Answer

An acceptable terms of trade must be between the opportunity costs of the two nations, which is between 4 and 5 chairs per table. 3 chairs per table is not within this range.

The Opportunity Cost of a Table Is 5 Chairs in Nation