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