Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.Suppose Country A specializes in bananas,and Country B specializes in tomatoes.The limits to the terms of trade that Country A would find acceptable are:
A)Country A will give no more than 5 bananas for each tomato.
B)Country A will give no less than 5 bananas for each tomato.
C)Country A will give no more than 1 tomato for every 5 bananas.
D)Country A will give no less than 1 tomato for every 5 bananas.

Question

Quizplus · Accepted Answer

Country A can produce 25 bananas or 5 tomatoes per worker, so the opportunity cost of producing a tomato is 5 bananas. Country B can produce 18 bananas or 6 tomatoes per worker, so the opportunity cost of producing a tomato is 3 bananas. Therefore, Country A would find it acceptable to trade no more than 5 bananas for each tomato.

Suppose That a Worker in Country a Can Make Either