Asked by Abena Opoku on Apr 24, 2024
Verified
Refer to Table 20.5. The most that Vietnam will be willing to pay for a bushel of cashews is
A) 5 lbs. of tea.
B) 6.25 lbs. of tea.
C) 7.5 lbs. of tea.
D) 10 lbs. of tea.
Opportunity Cost
Abandoning potential gains available from alternative choices when one is picked.
Bushel
A unit of volume that is used primarily in agriculture, specifically for measuring volumes of dry goods such as grains and fruits.
- Identify terms of trade that benefit both countries involved in trade.
Verified Answer
VD
Vipan Dhaliwal7 days ago
Final Answer :
C
Explanation :
The most Vietnam will be willing to pay for a bushel of cashews is determined by the opportunity cost of producing one more bushel of cashews instead of tea. From the table, moving from 0 to 20 bushels of cashews, Vietnam gives up 150 lbs. of tea (600 - 450 = 150). Therefore, for 20 bushels, the cost is 150 lbs. of tea, which means the cost per bushel is 150 lbs. / 20 bushels = 7.5 lbs. of tea per bushel.
Learning Objectives
- Identify terms of trade that benefit both countries involved in trade.