5. The price of trade Suppose that Poland and Luxembourg both produce boots and wheat. Poland's opportunity cost of producing a bushel of wheat is 4 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 12 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that Poland production of wheat and Luxembourg has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Poland and Luxembourg consider traling wheat and boots with each other. Poland can gain from specialization and trade as long as it of boots for each bushel of wheat it exports to Luxembourg. Similarly, Luxembourg can gain from trade as long as it of wheat for each pair of boots it exports to Poland. receives more than receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Luxembourg and Poland to gain from trade? Check all that apply. 3 pairs of boots per bushel of wheat 17 pairs of boots per bushel of wheat 1 pair of boots per bushel of wheat 6 pairs of boots per bushel of wheat
5. The price of trade Suppose that Poland and Luxembourg both produce boots and wheat. Poland's
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