10 Question 3 points In a month Carlos can produce a maximum

10 Question (3 points) In a month, Carlos can produce a maximum of either 20 bushels of pears or 10 bushels of apples, or any linear combination in between. Similarly, Donna can produce a maximum of either 28 bushels of pears or 7 bushels of apples, or any linear combination in between

Solution

Opportunity cost of 1bushel of apple for Carlos=2pears

Opp. Cost of 1bushles of apple for Donna=4pears

Thus term of trade acceptable to both for one bushels of apple is 2-4 bushels of pears

Thus 3 bushels of pears can be acceptable term of trade for bushels of pears