Refer to the information provided in Table 20.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 20.5 $\quad $$\quad $$\quad $$\quad $$\text { India} $$\quad $$\quad $$\quad $$\quad $ $\quad $$\text { Vietnam } $
$\begin{array} { c c c c }
\text { Cashews } & \text { Tea } & \text { Cashews } & \text { Tea } \
\hline 0 & 600 & 0 & 600 \
20 & 500 & 20 & 450 \
40 & 400 & 40 & 300 \
60 & 300 & 60 & 150 \
80 & 200 & 80 & 0 \
100 & 100 & - & - \
120 & 0 & - & - \
\hline
\end{array}$
-Refer to Table 20.5. The most that India will be willing to pay for a lb. of tea is
A) 1/10 of a bushel of cashews.
B) 1/5 of a bushel of cashews.
C) 1/4 of a bushel of cashews.
D) 1/2 of a bushel of cashews.

Question

Refer to the information provided in Table 20.5 below to answer the question(s) that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 20.5 $\quad $$\quad $$\quad $$\quad $$\text { India} $$\quad $$\quad $$\quad $$\quad $ $\quad $$\text { Vietnam } $ 
$\begin{array} { c c c c } 
\text { Cashews } & \text { Tea } & \text { Cashews } & \text { Tea } \
\hline 0 & 600 & 0 & 600 \
20 & 500 & 20 & 450 \
40 & 400 & 40 & 300 \
60 & 300 & 60 & 150 \
80 & 200 & 80 & 0 \
100 & 100 & - & - \
120 & 0 & - & - \
\hline
\end{array}$
-Refer to Table 20.5. The most that India will be willing to pay for a lb. of tea is
A) 1/10 of a bushel of cashews.
B) 1/5 of a bushel of cashews.
C) 1/4 of a bushel of cashews.
D) 1/2 of a bushel of cashews.

Quizplus · Accepted Answer

The table shows that India's production possibility frontier moves from 0 tea and 120 cashews to 600 tea and 0 cashews. The maximum willingness to pay can be seen at the extreme where India gives up cashews entirely for tea, which happens at a rate of 100 cashews for 600 tea, or 1 cashew for 6 tea. This means India would be willing to pay up to 1/6 of a bushel of cashews for a pound of tea, which is closest to 1/5 of a bushel of cashews (option B), as it's the option that most closely matches the calculated exchange rate.

Refer to the Information Provided in Table 20 \quad \quad

Refer to the Information Provided in Table 20 $\quad$ $\quad$