Economics: Principles & Policy
14th Edition
ISBN: 9781337912679
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning US
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Question
Chapter 34, Problem 1DQ
To determine
The reason for nevertheless to be likely better off.
Expert Solution & Answer
Explanation of Solution
Since the person who does not have a pair of shoe exchanges his half dozen of shirts to attain 3 pairs of shoes and the person who does not have a shirt is willing to exchange his 3 pairs of shoes to get 6 shirts, the exchange rate between shoes and shirts become 1:2. Therefore, the value of 1 pair of shoes is equivalent to 2 shirts. Thus, there is no financial gain through this exchange.
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Chapter 34 Solutions
Economics: Principles & Policy
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