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AP® Macroeconomics

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Terms of Trade: Countries X and Y Make Cell Phones and Sneakers

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Country X and Country Y can produce either cell phones or sneakers. In Country X, the opportunity cost of 1 cell phone is 3 pairs of sneakers. In Country Y, the opportunity cost of 1 cell phone is 8 pairs of sneakers.

Which of the following would NOT be acceptable terms of trade for Country X and Country Y?

A

1 cell phone in exchange for 3 pairs of sneakers.

B

1 cell phone in exchange for 5 pairs of sneakers.

C

1 cell phone in exchange for 1 pair of sneakers.

D

1 cell phone in exchange for 4 pairs of sneakers.

E

1 cell phone in exchange for 7 pairs of sneakers.