Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.

-Refer to Table 3-25. At which of the following prices would both Maya and Miguel gain from trade with each other?
A)4 mixers for 7 toasters
B)8 mixers for 10 toasters
C)12 mixers for 18 toasters
D)Maya and Miguel could not both gain from trade with each other at any price.

Question

Table 3-25
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
​ 
-Refer to Table 3-25. At which of the following prices would both Maya and Miguel gain from trade with each other?
A)4 mixers for 7 toasters 
B)8 mixers for 10 toasters 
C)12 mixers for 18 toasters 
D)Maya and Miguel could not both gain from trade with each other at any price.

Quizplus · Accepted Answer

For both Maya and Miguel to gain from trade, the trade price must be between their opportunity costs. If Maya's opportunity cost of 1 mixer is less than 1.75 toasters (7/4) and Miguel's opportunity cost of 1 toaster is less than 0.57 mixers (4/7), then both can benefit from trade.

Table 3-25 Assume That Maya and Miguel Can Switch Between Producing Mixers