could someone help me solve this? macmillan learning Suppose there are two indiv

Question

could someone help me solve this?

macmillan learning Suppose there are two individuals, Casey and Rick, who live in a very simplified world where only two ods are produced and consumed: steak and potatoes. The production opportunity cost for Casey is 5.00 ilograms of steak for every kilogram of potatoes. Rick has a production opportunity cost of 3.00 kilograms of steak for every kilogram of potatoes Eventually Casey realizes that through trade, both individuals can be better off and Rick is willing to trade What price can be setted between these two parties such that both individuals can enjoy more of steak and potatoes? Number kilogram(s) of steak per kilogram of potatoes Previous O Check Answer O Next Exit

Explanation / Answer

Solution:-

Casey:

Opportunity cost of 1 kg potatoes = 5 kg Steak

Rick:

Opportunity cost of 1 kg potatoes = 3 kg Steak

Trade only occurs when countries have comparative advantage in one good.

Any price between 5 kilogram and 3 kilogram of Steak per kilogram of tomato will make both the individuals benefit from trade.

Thus, the price of 4 kilogram of steak per kilogram of tomato will benefit both.

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