Suppose there are two individuals, Casey and Rick, who live in a very simplified

Question

Suppose there are two individuals, Casey and Rick, who live in a very simplified world where only two are produced and consumed: spaghetti and tomato sauce. The production opportunity cost for is 7.00 kilograms of spaghetti for every kilogram of tomato sauce. Rick has a production opportunity cost of 5.00 kilograms of spaghetti for every kilogram of tomato sauce Eventually Casey realizes that through trade, both individuals can be better off and Rick is willing to trade What price can be settled between these two parties such that both individuals can enjoy more of and tomato sauce? Number kilogram(s) of spaghetti per kilogram of tomato sauce

Explanation / Answer

The trade will happen when Casey has to give less than 7 kilograms of spaghetti to get a kilogram of sauce and Rick will get more than 5 KG of spaghetti from his 1 Kg of sauce.

The answer is 6 kilograms of spaghetti per kilogram of tomato sauce.

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