5. The price of trade Suppose that France and Switzerland both produce jeans and olives. France's opportunity cost of producing a crate of olives is 5 pairs of jeans while Switzerland's opportunity cost of producing a crate of olives is 10 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that production of olives and has a comparative advantage in the production of jeans. has a comparative advantage in the Suppose that France and Switzerland consider trading olives and jeans with each other. France can gain from specialization and trade as long as it of jeans for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than of olives for each pair of jeans it exports to France. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both Switzerland and France to gain from trade? Check all that apply. 9 pairs of jeans per crate of olives 1 pair of jeans per crate of olives 15 pairs of jeans per crate of olives 8 pairs of jeans per crate of olives

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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5. The price of trade
Suppose that France and Switzerland both produce jeans and olives. France's opportunity cost of producing a crate of olives is 5 pairs of jeans while
Switzerland's opportunity cost of producing a crate of olives is 10 pairs of jeans.
By comparing the opportunity cost of producing olives in the two countries, you can tell that
production of olives and
has a comparative advantage in the production of jeans.
has a comparative advantage in the
Suppose that France and Switzerland consider trading olives and jeans with each other. France can gain from specialization and trade as long as it
of jeans for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it
receives more than
of olives for each pair of jeans it exports to France.
receives more than
Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both
Switzerland and France to gain from trade? Check all that apply.
9 pairs of jeans per crate of olives
1 pair of jeans per crate of olives
15 pairs of jeans per crate of olives
8 pairs of jeans per crate of olives
Transcribed Image Text:5. The price of trade Suppose that France and Switzerland both produce jeans and olives. France's opportunity cost of producing a crate of olives is 5 pairs of jeans while Switzerland's opportunity cost of producing a crate of olives is 10 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that production of olives and has a comparative advantage in the production of jeans. has a comparative advantage in the Suppose that France and Switzerland consider trading olives and jeans with each other. France can gain from specialization and trade as long as it of jeans for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than of olives for each pair of jeans it exports to France. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both Switzerland and France to gain from trade? Check all that apply. 9 pairs of jeans per crate of olives 1 pair of jeans per crate of olives 15 pairs of jeans per crate of olives 8 pairs of jeans per crate of olives
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