Table Production Possibiliies for Kenya and Sri Lanka Beans

Table: Production Possibiliies for Kenya and Sri Lanka Beans (millions of tons) 100 150 Tea (millions of tons) 200 450 Kenya Sri Lanka Reference: Ref 2-6 (Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, which of the following answers identifies a trade price that both countries would find acceptable? (Units are in tons.) A. 0.5 bean for one tea

Solution

Answer : Option A is correct.

As trade price between two countries are the same so that they are acceptable between both the country such as

0.5 bean for one tea< Trade price< two teas for one bean because as in the kenya there is double production of tea as compare beans so this trade price is acceptable where as in the Sri lanka the production of tea is three times as compare to beans. But we prepared that trade price from which both of the country are acceptable and cannot harmed anyone. So we cannot accept three tea for one bean.