Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.

-Refer to Table 3-1.At which of the following prices would both Andia and Zardia gain from trade with each other?
A) 6 bushels of wheat for 10.5 pounds of beef
B) 12 bushels of wheat for 19 pounds of beef
C) 24 bushels of wheat for 34 pounds of beef
D) Andia and Zardia could not both gain from trade with each other at any price.

Question

Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
 
-Refer to Table 3-1.At which of the following prices would both Andia and Zardia gain from trade with each other?
A) 6 bushels of wheat for 10.5 pounds of beef 
B) 12 bushels of wheat for 19 pounds of beef 
C) 24 bushels of wheat for 34 pounds of beef 
D) Andia and Zardia could not both gain from trade with each other at any price.

Quizplus · Accepted Answer

Both Andia and Zardia would gain from trade if the price of wheat is between their opportunity costs. If Andia's opportunity cost of producing wheat is lower than the trade price and Zardia's opportunity cost is higher, both can benefit. Option B fits this condition.

Table 3-1 Assume That Andia and Zardia Can Switch Between Producing Wheat