Question

The terms of trade can take on any value Group of answer choices above the seller's opportunity cost. below the seller's opportunity cost and above the buyer's opportunity cost. above the seller's opportunity cost and below the buyer's opportunity cost. below the seller's opportunity cost and below the buyer's opportunity cost.

Answer 1

Answer:

above the seller's opportunity cost and below the buyer's opportunity cost.

Explanation:

Terms of trade is the ratio a country's export prices to its import prices.

Terms of trade = (export / import) x 100

export would comprise of goods and services produced in the US that are been sold to foreign countries

Import would comprise of foreign produced goods and services that are been sold in the US

Terms of trade that exceeds 100 is a positive economic indicator

Opportunity cost of the next best option forgone when one alternative is chosen over other alternatives

For a trade to be beneficial to the seller, it should exceed the opportunity cost of the seller

For it to be beneficial to the buyer, it should be below the opportunity cost of the buyer

It is under these circumstances that a profit is guaranteed