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Refer to the scenario above.

If the terms of trade are 1.5 kilos of cloudberries for a kilo of salted cod, the terms of trade are ________.

Answer :

Answer:

B. Advantageous for both Norway and Sweden.

Explanation:

The full question is missing but have been attached as picture below.

Options Includes "A. advantageous for Norway but not for Sweden, B. advantageous for both Norway and Sweden, C. advantageous for Sweden but not for Norway, D. not advantageous for either Norway or Sweden"

Norway's opportunity cost of salted cod is 1 cloud berries and 2 cloud berries for Sweden. Since the international price lies between Norway's and Sweden's opportunity cost, it is beneficial for both of them.

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Final answer:

The terms of trade in the asked scenario are 1.5 kilos of cloudberries for a kilo of salted cod. It's the rate at which these goods are exchanged for one another.

Explanation:

The term 'Terms of Trade' in economics is used to define the rate at which one country's goods are exchanged for another's. In the given scenario, the terms of trade are established at 1.5 kilos of cloudberries for a kilo of salted cod. This indicates that, in this specific situation, 1.5 kilos of cloudberries are considered equivalent in value to a kilo of salted cod. The ratio of the exchange (1.5:1 in this case) is what's referred to as the terms of trade.

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