5. The price of trade Suppose that Croatia and Liechtenstein both produce boots and broccoli. Croatia's opportunity cost of producing a bushel of broccoli is 5 pairs of boots while Liechtenstein's opportunity cost of producing a bushel of broccoli is 11 pairs of boots. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that the production of broccoli and has a comparative advantage in has a comparative advantage in the production of boots. Suppose that Croatia and Liechtenstein consider trading broccoli and boots with each other. Croatia can gain from specialization and trade as long as it receives more than of boots for each bushel of broccoli it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as long of broccoli for each pair of boots it exports to Croatia. as it receives more 1 pair Based on your answ 1/11 pair t question, which of the following prices of trade (that is, price of broccoli in terms of boots) would allow both Liechtenstein and C h from trade? Check all that apply. 1/5 pair 15 pairs o 3 pairs of bushel of broccoli 5 pairs ushel of broccoli 11 pairs 10 pairs of boots per bushel of broccoli 7 pairs of boots per bushel of broccoli

5. The price of trade Suppose that Croatia and Liechtenstein both produce boots and broccoli. Croatia's opportunity cost of producing a bushel of broccoli is 5 pairs of boots while Liechtenstein's opportunity cost of producing a bushel of broccoli is 11 pairs of boots. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that the production of broccoli and has a comparative advantage in has a comparative advantage in the production of boots. Suppose that Croatia and Liechtenstein consider trading broccoli and boots with each other. Croatia can gain from specialization and trade as long as it receives more than of boots for each bushel of broccoli it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as long of broccoli for each pair of boots it exports to Croatia. as it receives more 1 pair Based on your answ 1/11 pair t question, which of the following prices of trade (that is, price of broccoli in terms of boots) would allow both Liechtenstein and C h from trade? Check all that apply. 1/5 pair 15 pairs o 3 pairs of bushel of broccoli 5 pairs ushel of broccoli 11 pairs 10 pairs of boots per bushel of broccoli 7 pairs of boots per bushel of broccoli

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains Rrom Trade

Section: Chapter Questions

Problem 9PA

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