Question

Spaniards can produce 10 gallons of wine or 8 gallons of olive oil per worker hour. Americans can produce 9 gallons of wine or 6 gallons on olive oil per worker hour. Which of these exchange rates would allow both countries to gain from selling wine in exchange for olive oil?

a. Americans, Spanish
b. Americans, Americans
c. Spanish, Spanish
d. Spanish, Americans

Answer 1

Answer:

a. Americans, Spanish

Explanation:

Particulars  Wine  Olive Oil    Opportunity   Opportunity cost of Olive oil

                                         cost of Wine

Spaniards    10            8           0.8                   1.25

Americans   9             6           0.67                 1.5

From the above table, the first option is correct