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 Country A will give no:
A) more than 5 bananas for each tomato.
B) less than 5 bananas for each tomato.
C) more than 1 tomato for every 5 bananas.
D) less than 1 tomato for every 5 bananas.

Question

Quizplus · Accepted Answer

Country A's opportunity cost of producing 1 tomato is 5 bananas (25 bananas/5 tomatoes). Therefore, Country A would not accept trading more than 5 bananas for each tomato, as it would be worse off than producing tomatoes itself.

Suppose That a Worker in Country a Can Make Either