Using the Figure Above,suppose with No Trade Liz and Joe

question 93

Multiple Choice

Using the figure above,suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then,Liz suggests that they specialize and trade.She would produces only smoothies and Joe would produce only salads.Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie.In this scenario,

• A)Liz gains 10 smoothies and 5 salads,and Joe gains 5 smoothies.
• B)Liz gains 5 smoothies,and Joe gains 10 smoothies.
• C)Liz gains 10 smoothies,and Joe loses 5 smoothies.
• D)Liz gains 5 smoothies and 5 salads,and Joe loses 5 salads.
• E)Neither of the individuals gains from trade.

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