Question

country alpha takes 4 hours to produce a unit of jet fuel and 2 hours to produce a unit of butter. country omega takes 9 hours to produce a unit of jet fuel and 3 hours to produce a unit of butter. based on this, what range of butter for every 100 units of jet fuel would be mutually beneficial? (3 points)

Answer 1

Between 200 and 300 units of butter

Step-by-step explanation:

First, set the scenario in 36 hr to find the unit produced for each good in each country.

| Jet | Butter
Alpha | 9 units | 18 units
Beta | 4 units | 12 units

Alpha: OC for Jet Fuel is 18/9 = 2 units of Butter
OC for Butter is 9/18 = 1/2 unit of Jet Fuel

Beta: OC for Jet Fuel is 12/4 = 3 units of Butter
OC for Butter is 4/12 = 1/3 unit of Jet Fuel

So to produce 1 unit of Jet Fuel, the Terms of Trade would be-
2 < x < 3

And to multiply 1 unit by 100 = 100 unit of Jet Fuel, Terms of Trade would be-

200 < x < 300

AP Macro Mod 1

I hope this helps!
Have a great day!