$$\begin{array}{l}
{ ~~~~~~~~~~~~~~~~~~~~~\text { Wat's Production Possibilities } }\
\begin{array} { | l | c | c | c | c | c | c | }
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Rice } & 750 & 600 & 450 & 300 & 150 & 0 \
\hline \text { Corn } & 0 & 50 & 100 & 150 & 200 & 250 \
\hline
\end{array}\\
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\text { Xat's Production Possibilities } }\
\begin{array} { | l | c | c | c | c | c | c | }
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Rice } & 2,500 & 2,000 & 1,500 & 1,000 & 500 & 0 \
\hline \text { Corn } & 0 & 100 & 200 & 300 & 400 & 500 \
\hline
\end{array}
\end{array}$$ The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. The mutually bene?cial terms of trade will be

Question

$$\begin{array}{l}
{ ~~~~~~~~~~~~~~~~~~~~~\text { Wat's Production Possibilities } }\
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Rice } & 750 & 600 & 450 & 300 & 150 & 0 \
\hline \text { Corn } & 0 & 50 & 100 & 150 & 200 & 250 \
\hline
\end{array}\\
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\text { Xat's Production Possibilities } }\
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Rice } & 2,500 & 2,000 & 1,500 & 1,000 & 500 & 0 \
\hline \text { Corn } & 0 & 100 & 200 & 300 & 400 & 500 \
\hline
\end{array}
\end{array}$$ The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. The mutually bene?cial terms of trade will be

Quizplus · Accepted Answer

To determine the mutually beneficial terms of trade, we need to compare the opportunity costs of producing rice and corn in each nation. Wat has an opportunity cost of 1/2 unit of rice for 1 unit of corn, while Xat has an opportunity cost of 4 units of rice for 1 unit of corn. Therefore, Xat has a comparative advantage in producing rice, while Wat has a comparative advantage in producing corn. 
The mutually beneficial terms of trade will lie somewhere between Wat giving up 3 units of rice for 1 unit of corn (3 times its opportunity cost) and Xat giving up 5 units of rice for 1 unit of corn (5 times its opportunity cost). 
Therefore, the correct answer is D, between 3 and 5 units of rice for 1 unit of corn.

The Hypothetical Nations Wat and Xat Have the Production Possibilities