The Following Figure Depicts Four Different Scenarios in Which the Blue

question 13

Multiple Choice

The following figure depicts four different scenarios in which the blue line represents California's production possibilities curve (PPC) and the red line represents Texas' PPC. These two states trade wine and cloth.

-Refer to the figure above.In what scenario would the terms of trade of cloth for wine be between 1 and 1.25?

• A) (1)
• B) (2)
• C) (3)
• D) (4)

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