025 pts correct Question 12 Snap and Bolt are two countries

0/2.5 pts correct Question 12 Snap and Bolt are two countries that both produce chicken and vegetables. In Snap each worker in a one-hour period can produce either 9.23 pounds of chicken or 4.65 pounds of vegetables. In Bolt each worker in a one-hour period can produce either 27 pounds of chicken or 7.62 pounds of vegetables. Suppose both countries have constant opportunity cost of production and decide to specialize and exchange. The country that specializes in vegetables is willing to sell 10 pounds of vegetables for at least pounds of chicken. Enter a numerical value, rounded to two decimal places, such as 4.56 or 8.20 35.4300

Solution

The opportunity cost of chicken for Snap = 4.65/9.23 = 0.503.

The opportunity cost of chicken for Bolt = 7.62/27 = 0.28

Therefore Bolt will sell chicken and Snap will sell vegetables because opportunity cost of producing chicken is less for Bolt. Opportunity cost of vegetable for Snap = 9.23/4.655 = 1.98. Snap will sell vegetables for anything greater than or equal to 2chikens/vegetable. So will trade 10 pounds of vegetables for 19.80 chickens.