uppose that in the French compound of a POW camp, the price of cheese is 16 cigarettes per cheese ration and the price of tea is 4 garettes per tea ration. In the British compound, the price of tea is 24 cigarettes per ration. there an opportunity for beneficial exchange? French prisoner could exchange his cheese ration for cigarettes, then exchange the extra cigarettes for tea rations in the French ompound. If he travels to the British compound, he could exchange the extra tea for cigarettes. When he returns to the French ompound, he can exchange the extra cigarettes for cheese rations. In other words, his net gain from trade is cheese rations.
uppose that in the French compound of a POW camp, the price of cheese is 16 cigarettes per cheese ration and the price of tea is 4 garettes per tea ration. In the British compound, the price of tea is 24 cigarettes per ration. there an opportunity for beneficial exchange? French prisoner could exchange his cheese ration for cigarettes, then exchange the extra cigarettes for tea rations in the French ompound. If he travels to the British compound, he could exchange the extra tea for cigarettes. When he returns to the French ompound, he can exchange the extra cigarettes for cheese rations. In other words, his net gain from trade is cheese rations.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
6
Transcribed Image Text:Suppose that in the French compound of a POW camp, the price of cheese is 16 cigarettes per cheese ration and the price of tea is 4
cigarettes per tea ration. In the British compound, the price of tea is 24 cigarettes per ration.
Is there an opportunity for beneficial exchange?
A French prisoner could exchange his cheese ration for cigarettes, then exchange the extra cigarettes for tea rations in the French
compound. If he travels to the British compound, he could exchange the extra tea for cigarettes. When he returns to the French
compound, he can exchange the extra cigarettes for cheese rations. In other words, his net gain from trade is cheese rations.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education