Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. Germany wishes to purchase computers from the United States in exchange for cameras. What is the maximum number of cameras per computer that Germany would be willing to pay the United States?

Question

Quizplus · Accepted Answer

Germany would be willing to pay up to 20 cameras for one computer because it costs them the same amount of production time to make either 20 cameras or 1 computer. Trading more than 20 cameras for a computer would mean they are giving up more than they would produce on their own in the same amount of time.

Suppose That a Typical German Factory Can Produce 20 Cameras