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Unformatted text preview: Jack is buying shirts. It costs him 1 unit of wheat to produce a shirt. He will only buy a shirt from Jill if it is cheaper to buy the shirt from Jill than to produce it on his own. So, the price of shirts must be less than 1 unit of wheat. Then, for a trade to be made, the price of shirts must be less than 1 unit of wheat and greater than units of wheat. 4. a. Point A is feasible but inefficient. b. Point B is feasible and efficient. c. Point C is not feasible. 5. a. The opportunity cost of producing another unit of milk at point A is (1/3) units of cotton. b. The opportunity cost of producing another unit of cotton at point B is (1/2) units of milk....
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