Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.

-Refer to Table 3-6.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 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
 
-Refer to Table 3-6.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 price must be between their opportunity costs. If Maya's opportunity cost of a mixer is less than 7/4 toasters and Miguel's opportunity cost of a toaster is less than 4/7 mixers, then both can benefit from the trade at this price.

Table 3-6 Assume That Maya and Miguel Can Switch Between Producing Mixers