France Terms of trade Sweden Suppose that France and Sweden both produce fish and wine. France's opportunity cost of producing a bottle of wine is 5 pounds of fish, while Sweden's opportunity cost of producing a bottle of wine is 11 pounds of fish. By comparing the opportunity cost of producing wine in the two countries, you can tell that ▼ has a comparative advantage in the production of wine, and has a comparative advantage in the production of fish. Suppose that France and Sweden consider trading wine and fish with each other. France can gain from specialization and trade as long as it receives more than v of fish for each bottle of wine It exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more than of wine for each pound of fish It exports to France. Başed on your answers to the previous question, which of the following terms of trade (that is, price of wine in terms of fish) would allow both Sweden 1 pound and France to gain from trade? Check all that apply. 1/11 pound O 2 pounds of fish per bottle of wine 1/5 pound O 1 pound of fish per bottle of wine 5 pounds O 10 pounds of fish per bottle of wine 11 pounds O 17 pounds of fish per bottle of wine

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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France
Terms of trade
Sweden
Suppose that France and Sweden both produce fish and wine. France's opportunity cost of producing a bottle of wine is 5 pounds of fish, while
Sweden's opportunity cost of producing a bottle of wine is 11 pounds of fish.
By comparing the opportunity cost of producing wine in the two countries, you can tell that
v has a comparative advantage in the
production of wine, and
has a comparative advantage in the production of fish.
Suppose that France and Sweden consider trading wine and fish with each other. France can gain from specialization and trade as long as it receives
more than
of fish for each bottle of wine it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more
than
of wine for each pound of fish it exports to France.
Başed on your answers to the previous question, which of the following terms of trade (that is, price of wine in terms of fish) would allow both Sweden
1 pound
and France to gain from trade? Check all that apply.
1/11 pound
O 2 pounds of fish per bottle of wine
1/5 pound
O 1 pound of fish per bottle of wine
5 pounds
O 10 pounds of fish per bottle of wine
11 pounds
O 17 pounds of fish per bottle of wine
Transcribed Image Text:France Terms of trade Sweden Suppose that France and Sweden both produce fish and wine. France's opportunity cost of producing a bottle of wine is 5 pounds of fish, while Sweden's opportunity cost of producing a bottle of wine is 11 pounds of fish. By comparing the opportunity cost of producing wine in the two countries, you can tell that v has a comparative advantage in the production of wine, and has a comparative advantage in the production of fish. Suppose that France and Sweden consider trading wine and fish with each other. France can gain from specialization and trade as long as it receives more than of fish for each bottle of wine it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more than of wine for each pound of fish it exports to France. Başed on your answers to the previous question, which of the following terms of trade (that is, price of wine in terms of fish) would allow both Sweden 1 pound and France to gain from trade? Check all that apply. 1/11 pound O 2 pounds of fish per bottle of wine 1/5 pound O 1 pound of fish per bottle of wine 5 pounds O 10 pounds of fish per bottle of wine 11 pounds O 17 pounds of fish per bottle of wine
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