Figure 18.1

-Refer to Figure 18.1. Mutually beneficial terms of trade between the United States and Canada are

Question

Figure 18.1
 
-Refer to Figure 18.1. Mutually beneficial terms of trade between the United States and Canada are

Quizplus · Accepted Answer

Mutually beneficial terms of trade occur when both countries can trade goods at a rate that is better than their opportunity cost. If the opportunity cost of producing a hang glider in the U.S. is more than 1/2 of a bicycle, and in Canada it is less, then 1 hang glider for 1/2 of a bicycle would be beneficial for both.

Figure 18.1 -Refer to Figure 18.1. Mutually Beneficial Terms of Trade Between