Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 3 - Exchange and Markets - Exercises - 3.2 Markets - Page 65: 2.5b

Answer

6 2 48 8 7

Work Step by Step

In the British compound a ration of cheese can be exchanged for 6 cigarettes. At 2 cigarettes each , those 6 cigarettes can be exchanged for 2 coffee rations. In the French compound those 2 coffee rations are worth 48 cigarettes, which can be exchanged in the British compound for 8 cheese rations ($48\div6$). Through trade, the British prisoner has turned 1 cheese ration into 8, for a net gain of 7 cheese rations.
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