5. The price of trade Suppose that France and Denmark both produce beer and stained glass. France's opportunity cost of producing a pane of stained glass is 5 barrels of beer while Denmark's opportunity cost of producing a pane of stained glass is 10 barrels of beer. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that has a comparative advantage in the production of stained glass and has a comparative advantage in the production of beer. Suppose that France and Denmark consider trading stained glass and beer with each other. France can gain from specialization and trade as long as it receives more than of beer for each pane of stained glass it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of stained glass for each barrel of beer it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of beer) would allow both Denmark and France to gain from trade? Check all that apply. 1 barrel of beer per pane of stained glass 2 barrels of beer per pane of stained glass 6 barrels of beer per pane of stained glass 9 barrels of beer per pane of stained glass

5. The price of trade Suppose that France and Denmark both produce beer and stained glass. France's opportunity cost of producing a pane of stained glass is 5 barrels of beer while Denmark's opportunity cost of producing a pane of stained glass is 10 barrels of beer. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that has a comparative advantage in the production of stained glass and has a comparative advantage in the production of beer. Suppose that France and Denmark consider trading stained glass and beer with each other. France can gain from specialization and trade as long as it receives more than of beer for each pane of stained glass it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of stained glass for each barrel of beer it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of beer) would allow both Denmark and France to gain from trade? Check all that apply. 1 barrel of beer per pane of stained glass 2 barrels of beer per pane of stained glass 6 barrels of beer per pane of stained glass 9 barrels of beer per pane of stained glass

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that Croatia and Wales both produce beets and wheat. Croatia's opportunity cost of producing a bushel of wheat is 4 bushels of beets while Wales's opportunity cost of producing a bushel of wheat is 11 bushels of beets. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of beets. Suppose that Croatia and Wales consider trading wheat and beets with each other. Croatia can gain from specialization and trade as long as it receives more than ▼ of beets for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives more of wheat for each bushel of beets it exports to Croatia. than has a comparative advantage in the Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Wales and Croatia to gain from trade? Check all that apply. ☐ 6 bushels of…