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Consider the example of Greta and Carlos discussed in The Economy textbook Unit 1 Section 1.8 and Figure 1.9a and 1.9b. a) What is the
Consider the example of Greta and Carlos discussed in The Economy textbook Unit 1 Section 1.8 and Figure 1.9a and 1.9b. a) What is the minimum number of apples that Greta would accept in return for a tonne of wheat? What is the minimum quantity of wheat in tonnes that Greta would accept in return for 1 apple? (2 marks) b) What is the minimum number of apples that Carlos would accept in return for a tonne of wheat? What is the minimum quantity of wheat in tonnes that Carlos would accept in return for 1 apple? (2 marks) c) Using the concept of opportunity cost, explain the possible range of the exchange rate of apples for wheat if Greta and Carlos are to trade with each other. (2 marks) (1) Explain what might you expect to happen to the exchange rate of apples for wheat if the effects of climate change reduce Greta's maximum production of wheat to 30 tonnes. Can you be certain of this outcome in this example? (2 marks)
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