Asked by Michael Frank on May 28, 2024
Verified
If the opportunity cost of corn to wheat is 3:1 in the United States and 5:1 in France, only the United States would benefit from trade if the actual terms of trade between corn and wheat were 2:1.
Opportunity Cost
The act of losing possible benefits from other routes when a single path is chosen.
Trade
The exchange of goods and services between individuals, businesses, or countries, which can be domestic or international in nature.
Corn
A cereal plant that yields large kernels on a cob, used as food for humans and livestock and as a raw material in industry.
- Recognize the way disparate opportunity costs between countries facilitate mutual gains through trade.
Verified Answer
Learning Objectives
- Recognize the way disparate opportunity costs between countries facilitate mutual gains through trade.
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