Coffee and Cheese Exchange in a POW Camp. Suppose that in the British compound of a prisoner of war (POW) camp, the price of cheese is 12 cigarettes per cheese ration and the price of coffee beans is 3 cigarettes per coffee ration. In the French compound, the price of coffee beans is 30 cigarettes per ration. a. Is there an opportunity for beneficial exchange? (Enter all values below as integer values.) b. A British prisoner could exchange his cheese ration for cigarettes, then exchange the cigarettes for coffee rations in the British compound. If he travels to the French compound, he could exchange the coffee for cigarettes. When he returns to the British compound, he can exchange the cigarettes for cheese rations. In other words, his net gain from trade is cheese rations.

Coffee and Cheese Exchange in a POW Camp. Suppose that in the British compound of a prisoner of war (POW) camp, the price of cheese is 12 cigarettes per cheese ration and the price of coffee beans is 3 cigarettes per coffee ration. In the French compound, the price of coffee beans is 30 cigarettes per ration. a. Is there an opportunity for beneficial exchange? (Enter all values below as integer values.) b. A British prisoner could exchange his cheese ration for cigarettes, then exchange the cigarettes for coffee rations in the British compound. If he travels to the French compound, he could exchange the coffee for cigarettes. When he returns to the British compound, he can exchange the cigarettes for cheese rations. In other words, his net gain from trade is cheese rations.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter3: The Market And Price System

Section: Chapter Questions

Problem 14E

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