Question

Maya and Max are neighbors. Each grows lettuce and tomatoes in their gardens. Maya can grow 45 heads of lettuce or 9 pounds of tomatoes this summer. Max can grow 42 heads of lettuce or 6 pounds of tomatoes this summer. If Maya and Max specialize and trade, the price of tomatoes (in terms of lettuce) would be as follows: 1 pound of tomatoes would cost between ______ and ______ pounds of lettuce.

Answer 1

5 and 7 heads of lettuce

Step-by-step explanation:

Maya can grow 45 heads of lettuce or 9 pounds of tomatoes:

Opportunity cost of producing 1 pound of tomatoes = 45 ÷ 9

= 5 heads of lettuce

Max can grow 42 heads of lettuce or 6 pounds of tomatoes:

Opportunity cost of producing 1 pound of tomatoes = 42 ÷ 6

= 7 heads of lettuce

Beneficial trade is experience when the terms of trade lies between the two opportunity costs.

Therefore, the price of 1 pound of tomatoes (in terms of lettuce) would cost between 5 and 7 heads of lettuce.