Assume Ireland can produce 4 units of good X or 2 units of good Y.France can produce 3 units of good X or 9 units of good Y.What would be the terms of trade between Ireland and France for 1 unit of good X?

Question

Quizplus · Accepted Answer

Ireland has a comparative advantage in producing good X as it can produce 4 units compared to France's production of 3 units. France has a comparative advantage in producing good Y as it can produce 9 units compared to Ireland's production of 2 units. 
For the terms of trade, Ireland would be willing to trade 1 unit of X for up to 2 units of Y (since it can produce 2 units of Y with the same resources used to produce 1 unit of X). France would be willing to trade 1 unit of X for up to 3 units of Y (since it can produce 3 units of X with the same resources used to produce 1 unit of Y). 
The range of possible terms of trade falls between 1/2 and 3 units of Y (with Ireland preferring 2 units and France preferring 3 units). Therefore, answer choice A is correct.

Assume Ireland Can Produce 4 Units of Good X or 2