A butcher can produce only hamburgers, and a farmer can produce only potato chips.The butcher and the farmer both like both foods.They:
A)cannot gain from trade
B)could gain from trade under certain circumstances, but not always
C)could gain from trade because each would enjoy a greater variety of food
D)could gain from trade only if each were indifferent between hamburgers and potato chips

Question

Quizplus · Accepted Answer

The butcher and farmer can gain from trade because by trading with each other, they can enjoy a greater variety of food than they would have if they only produced and consumed their own product. The butcher can provide the farmer with hamburgers, while the farmer can provide the butcher with potato chips. Both parties can then consume both hamburgers and potato chips, increasing their overall satisfaction from the consumption of food.

A Butcher Can Produce Only Hamburgers, and a Farmer Can