Exhibit 33-6

-Refer to Exhibit 33-6. Which of the following terms of trade would both countries agree on?

Name: Exhibit 33-6 -Refer to Exhibit 33-6. Which of the following terms of trade would both countries agree on?
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Question

Exhibit 33-6
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-Refer to Exhibit 33-6. Which of the following terms of trade would both countries agree on?

Quizplus · Accepted Answer

The terms of trade must be mutually beneficial, meaning they should fall between the opportunity costs of both countries. If the opportunity cost of wine in terms of cheese is between 1.5 and 2.5, then 1 unit of wine = 1.5 units of cheese is a feasible trade ratio.

Exhibit 33-6 ​

Exhibit 33-6