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AP® Macroeconomics

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Terms of Trade: New York and Vermont Make Apples and Syrup

APMACR-MDS@7D

New York and Vermont produce apples and maple syrup. In New York, the opportunity cost of 1 bushel of apples is 2 gallons of maple syrup. In Vermont, the opportunity cost of 1 bushel of apples is 5 gallons of maple syrup.

Which of the following statements describe terms of trade that would benefit both New York and Vermont?

A

1 bushel of apples in exchange for 1 gallon of syrup.

B

1 gallon of syrup in exchange for 3/4 of a bushel of apples.

C

1 bushel of apples in exchange for 6 gallons of syrup.

D

1 gallon of syrup in exchange for 1/3 of a bushel of apples.

E

1 gallon of syrup in exchange for 2/3 of a bushel of apples.