In two hours of work, Clinton can catch 4 fish or he can pick 5 pints of berries. In two hours, Dong can catch 6 fish or she can pick 9 pints of berries. Which statement is true?

Question

Quizplus · Accepted Answer

In two hours, Clinton's opportunity cost of catching 4 fish is picking 5/4 pints of berries. His opportunity cost of picking 5 pints of berries is catching 4/5 fish. Therefore, his opportunity cost of catching 6 fish (what Dong can do in two hours) is picking 5(4/6)=20/6 pints of berries. This is greater than his opportunity cost of picking 5 pints of berries, so he will gain from trading.

Similarly, Dong's opportunity cost of catching 6 fish is picking 9/6=3/2 pints of berries. Her opportunity cost of picking 5 pints of berries is catching 5/9 fish. Therefore, her opportunity cost of catching 4 fish (what Clinton can do in two hours) is picking 5(9/4)=45/4 pints of berries. This is greater than her opportunity cost of picking 5 pints of berries, so she will also gain from trading.

Therefore, both Clinton and Dong will benefit from trading and statement A is true.

In Two Hours of Work, Clinton Can Catch 4 Fish