William Gregg Owned a Mill in South Carolina

William Gregg owned a mill in South Carolina.In December 1862,he placed a notice in the Edgehill Advertister announcing his willingness to exchange cloth for food and other items.Here is an extract:
1 yard of cloth for 1 pound of bacon
2 yards of cloth for 1 pound of butter
4 yards of cloth for 1 pound of wool
8 yards of cloth for 1 bushel of salt
If the money price of bacon was 20¢ a pound and the money price of salt was $2.00 a bushel,people would ________.

A) buy bacon and trade it for cloth because they could buy 8 yards of cloth for only $1.60, and use that cloth to obtain a bushel of salt
B) not buy bacon and trade it for cloth because they would have to buy 8 yards of cloth for $1.60 and then give Mr.Gregg an extra $0.40 to buy a bushel of salt
C) buy bacon and trade it for cloth and then trade the cloth for salt because salt is more important for life than either cloth or bacon
D) not buy bacon and trade it for cloth because the relative price of 1 bushel of salt is only 1/8 yard of cloth
E) buy bacon and trade it for cloth because cloth is more expensive than bacon

Correct Answer:

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