Homework Help is Here – Start Your Trial Now!
Business
Economics
Suppose that France and Austria both produce jeans and wine. France's opportunity cost of producing a bottle of wine is 3 pairs of jeans while Austria's opportunity cost of producing a bottle of wine is 11 pairs of jeans. 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 jeans. Suppose that France and Austria consider trading wine and jeans with each other. France can gain from specialization and trade as long as it receives of jeans for each bottle of wine it exports to Austria. Similarly, Austria can gain from trade as long as it recelves more than more than of wine for each pair of jeans it exports to France.

Suppose that France and Austria both produce jeans and wine. France's opportunity cost of producing a bottle of wine is 3 pairs of jeans while Austria's opportunity cost of producing a bottle of wine is 11 pairs of jeans. 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 jeans. Suppose that France and Austria consider trading wine and jeans with each other. France can gain from specialization and trade as long as it receives of jeans for each bottle of wine it exports to Austria. Similarly, Austria can gain from trade as long as it recelves more than more than of wine for each pair of jeans it exports to France.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

1

5. The price of trade Suppose that France and Austria both produce jeans and wine. France's opportunity cost of producing a bottle of wine is 3 pairs of jeans while Austria's opportunity cost of producing a bottle of wine is 11 pairs of jeans. 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 jeans. Suppose that France and Austria consider trading wine and jeans with each other. France can gain from specialization and trade as long as it receives more than of jeans for each bottle of wine it exports to Austria. Similarly, Austria can gain from trade as long as it recelves more than of wine for each pair of jeans it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of jeans) would allow both Austria and France to gain from trade? Check all that opply. D2 pairs of jeans per bottle of wine O4 pairs of jeans per bottle of wine Di pair of jeans per bottle of wine 6 pairs of jeans per bottle of wine
Transcribed Image Text:5. The price of trade Suppose that France and Austria both produce jeans and wine. France's opportunity cost of producing a bottle of wine is 3 pairs of jeans while Austria's opportunity cost of producing a bottle of wine is 11 pairs of jeans. 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 jeans. Suppose that France and Austria consider trading wine and jeans with each other. France can gain from specialization and trade as long as it receives more than of jeans for each bottle of wine it exports to Austria. Similarly, Austria can gain from trade as long as it recelves more than of wine for each pair of jeans it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of jeans) would allow both Austria and France to gain from trade? Check all that opply. D2 pairs of jeans per bottle of wine O4 pairs of jeans per bottle of wine Di pair of jeans per bottle of wine 6 pairs of jeans per bottle of wine
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS