This table shows how much cotton and cocoa can be produced in Peru and Brazil with one unit of equivalent resources. $$\begin{array}{l}
\begin{array} { | l | l | l | }
\hline & \begin{array} { l }
\text { Cotton } \
\text { (bales) }
\end{array} & \begin{array} { l }
\text { Cocoa Beans } \
\text { (bushels) }
\end{array} \
\hline \text { Peru } & 2 & 4 \
\hline \text { Brazil } & 1 & 6 \
\hline
\end{array}\
\text { TABLE 33- } 4
\end{array}$$
-Refer to Table 33- 4. For trade to be advantageous to both Peru and Brazil, the number of bushels of cocoa beans that must be traded for a bale of cotton is

Question

This table shows how much cotton and cocoa can be produced in Peru and Brazil with one unit of equivalent resources. $$\begin{array}{l}
\begin{array} { | l | l | l | } 
\hline & \begin{array} { l } 
\text { Cotton } \
\text { (bales) }
\end{array} & \begin{array} { l } 
\text { Cocoa Beans } \
\text { (bushels) }
\end{array} \
\hline \text { Peru } & 2 & 4 \
\hline \text { Brazil } & 1 & 6 \
\hline
\end{array}\
\text { TABLE 33- } 4
\end{array}$$
-Refer to Table 33- 4. For trade to be advantageous to both Peru and Brazil, the number of bushels of cocoa beans that must be traded for a bale of cotton is

Quizplus · Accepted Answer

For trade to be advantageous, the exchange rate must be between the opportunity costs of the two countries. Peru's opportunity cost of producing 1 bale of cotton is 2 bushels of cocoa, and Brazil's opportunity cost is 6 bushels of cocoa. Therefore, the trade must be more than 2 but less than 6 bushels of cocoa per bale of cotton.

This Table Shows How Much Cotton and Cocoa Can Be