Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month.

-Refer to Figure 3-11.In the nation of Cropitia,the opportunity cost of a pound of cheese is 1.5 pounds of ham.Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for
A) 1.0 pound of ham.
B) 1.4 pounds of ham.
C) 2.1 pounds of ham.
D) All of the above are correct.

Question

Figure 3-11
The graph below represents the various combinations of ham and cheese (in pounds) that the nation of Bonovia could produce in a given month.
 
-Refer to Figure 3-11.In the nation of Cropitia,the opportunity cost of a pound of cheese is 1.5 pounds of ham.Bonovia and Cropitia both can gain from trading with one another if one pound of cheese trades for
A) 1.0 pound of ham. 
B) 1.4 pounds of ham. 
C) 2.1 pounds of ham. 
D) All of the above are correct.

Quizplus · Accepted Answer

The opportunity cost of a pound of cheese in Cropitia is 1.5 pounds of ham. Therefore, if Bonovia trades 1 pound of cheese for less than 1.5 pounds of ham, it would be better off producing and consuming everything domestically. However, if Bonovia can trade 1 pound of cheese for more than 1.5 pounds of ham, it would be better off consuming some cheese from Cropitia and focusing on producing more ham. Among the given options, option B is the only one where Bonovia can gain from trade, as it can trade 1 pound of cheese for 1.4 pounds of ham, which is less than its opportunity cost of 1.5 pounds of ham. Therefore, both Bonovia and Cropitia can benefit from trading cheese for ham at this exchange rate.

Figure 3-11 the Graph Below Represents the Various Combinations of Ham and Ham