5. The price of trade Suppose that Ireland and Norway both produce olive oil and broccoli. Ireland's opportunity cost of producing a bushel of broccoli is 6 crates of olive oil while Norway's opportunity cost of producing a bushel of broccoli is 11 crates of olive oil. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of olive oil. has a comparative advantage in the Suppose that Ireland and Norway consider trading broccoli and olive oil with each other. Ireland can gain from specialization and trade as long as it receives more than of olive oil for each bushel of broccoli it exports to Norway. Similarly, Norway can gain from trade as long as it of broccoli for each crate of olive oil it exports to Ireland. receives more than_ Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of olive oil) would allow both Norway and Ireland to gain from trade? Check all that apply. 3 crates of olive oil per bushel of broccoli 7 crates of olive oil per bushel of broccoli 8 crates of olive oil per bushel of broccoli 1 crate of olive oil per bushel of broccoli
5. The price of trade Suppose that Ireland and Norway both produce olive oil and broccoli. Ireland's opportunity cost of producing a bushel of broccoli is 6 crates of olive oil while Norway's opportunity cost of producing a bushel of broccoli is 11 crates of olive oil. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of olive oil. has a comparative advantage in the Suppose that Ireland and Norway consider trading broccoli and olive oil with each other. Ireland can gain from specialization and trade as long as it receives more than of olive oil for each bushel of broccoli it exports to Norway. Similarly, Norway can gain from trade as long as it of broccoli for each crate of olive oil it exports to Ireland. receives more than_ Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of olive oil) would allow both Norway and Ireland to gain from trade? Check all that apply. 3 crates of olive oil per bushel of broccoli 7 crates of olive oil per bushel of broccoli 8 crates of olive oil per bushel of broccoli 1 crate of olive oil per bushel of broccoli
Chapter1: Making Economics Decisions
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Transcribed Image Text:5. The price of trade
Suppose that Ireland and Norway both produce olive oil and broccoli. Ireland's opportunity cost of producing a bushel of broccoli is 6 crates of olive oil
while Norway's opportunity cost of producing a bushel of broccoli is 11 crates of olive oil.
By comparing the opportunity cost of producing broccoll in the two countries, you can tell that
production of broccoli and
has a comparative advantage in the production of olive oil.
has a comparative advantage in the
Suppose that Ireland and Norway consider trading broccoli and olive oil with each other. Ireland can gain from specialization and trade as long as it
receives more than
of olive oil for each bushel of broccoli it exports to Norway. Similarly, Norway can gain from trade as long as it
of broccoli for each crate of olive oil it exports to Ireland.
receives more than
Based on your answer to the last question, which of the following prices of trade (that is, price of broccoli in terms of olive oil) would allow both
Norway and Ireland to gain from trade? Check all that apply.
3 crates of olive oll per bushel of broccoli
7 crates of olive oil per bushel of broccoli
8 crates of olive oil per bushel of broccoli
1 crate of olive oil per bushel of broccoli
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