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Unformatted text preview: For Fred to be willing to trade, he must receive more than 5/3 oz of corn for each oz of fish For Tom to be willing to trade, he must receive more than oz of fish for each oz of corn Each individual obtains a good at a price lower than there opportunity cost Tom has obtain an oz of fish at a price lower than 2 oz of corn Fred has to obtain an oz of corn at a price lower than 3/5 oz of fish Wednesday, September 06, 2006 FRED TOM 24(7/4) = 42 32(4/7) = 128/7 Fish Fish oz/day oz/day 18.25 25 16 CPF with trade CPF with trade 32 40 Corn oz/day 32 Corn oz/day * The terms of trade represents a different relative price, so the CPF shifts when trade occurs...
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This note was uploaded on 03/20/2008 for the course EC 201 taught by Professor Xasdf during the Fall '08 term at N.C. State.
- Fall '08