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27 November, 07:03

Brett has almond orchards, but he is sick of almonds and prefers to eat walnuts instead. The owner of the walnut orchard next door has offered to swap this year's crop with him. Assume he produces 1 comma 050 tons of almonds and his neighbor produces 774 tons of walnuts. If the market price of almonds is $ 103 per ton and the market price of walnuts is $ 114 per ton:

a. Should he make the exchange?

b. Does it matter whether he prefers almonds or walnuts? Why or why not?

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  1. 27 November, 09:40
    0
    a. Should he make the exchange?

    Brett Produces almonds = 1050 tons

    Owner of walnut produces = 774 tons

    Market Price almond = $103 per ton

    Market Price of walnuts = $114 per ton

    Therefore

    The market value of the almond crop = (1050 tons) x ($103)

    = $108,150

    The market value of the walnut crop = (774 tons) x ($ 114)

    = $88,236

    He should not make the exchange since the price of almond is high than walnuts

    b. Does it matter whether he prefers almonds or walnuts?

    Why or why not?

    No. His preference is irrelevant to the value of the crops.

    Is the above statement true or false? True
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