Given the information in the figure above,Joe can benefit from trade as far as the price at which he buys Liz's smoothies is
A) below 5 salads per smoothie.
B) not higher than 2 salads per smoothie.
C) not lower than 2 salads per smoothie.
D) not lower than 1 salad per smoothie.
E) not higher than 4 salads per smoothie.

Question

Quizplus · Accepted Answer

Joe can benefit from trade as far as the price at which he buys Liz's smoothies is below 5 salads per smoothie. This is because Joe's opportunity cost of producing a smoothie is 2 salads, while Liz's opportunity cost of producing a smoothie is 4 salads. Therefore, Joe can benefit from trade by buying smoothies from Liz at a price below 5 salads per smoothie.

Given the Information in the Figure Above,Joe Can Benefit from Trade