Table 3-6
Assume that Hilda and Carlos can switch between producing quilts and producing dresses at a constant rate.

-Refer to Table 3-6.At which of the following prices would both Hilda and Carlos gain from trade with each other?
A) 10 quilts for 25 dresses
B) 20 quilts for 70 dresses
C) 30 quilts for 120 dresses
D) Hilda and Carlos could not both gain from trade with each other at any price.

Question

Table 3-6
Assume that Hilda and Carlos can switch between producing quilts and producing dresses at a constant rate.
 
-Refer to Table 3-6.At which of the following prices would both Hilda and Carlos gain from trade with each other?
A) 10 quilts for 25 dresses 
B) 20 quilts for 70 dresses 
C) 30 quilts for 120 dresses 
D) Hilda and Carlos could not both gain from trade with each other at any price.

Quizplus · Accepted Answer

For both Hilda and Carlos to gain from trade, the price must be between their opportunity costs. If Hilda's opportunity cost of quilts is less than 2.5 dresses per quilt and Carlos's opportunity cost is more than 2.5 dresses per quilt, then 10 quilts for 25 dresses (2.5 dresses per quilt) is a beneficial trade for both.

Table 3-6 Assume That Hilda and Carlos Can Switch Between Producing Quilts