Suppose that Ireland and Liechtenstein both produce olive oil and wheat. Ireland's opportunity cost of producing a bushel of wheat is 5 crates of olive oil while Liechtenstein's opportunity cost of producing a bushel of wheat is 11 crates of olive oil. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the has a comparative advantage in the production of olive oil. Suppose that Ireland and Liechtenstein consider trading wheat 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 wheat it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as of wheat for each crate of olive oil it exports to Ireland. long as it 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 olive oil) would allow both Liechtenstein and Ireland to gain from trade? Check all that apply. 1 crate of olive oil per bushel of wheat 2 crates of olive oil per bushel of wheat 7 crates of olive oil per bushel of wheat 15 crates of olive oil per bushel of wheat

Suppose that Ireland and Liechtenstein both produce olive oil and wheat. Ireland's opportunity cost of producing a bushel of wheat is 5 crates of olive oil while Liechtenstein's opportunity cost of producing a bushel of wheat is 11 crates of olive oil. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the has a comparative advantage in the production of olive oil. Suppose that Ireland and Liechtenstein consider trading wheat 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 wheat it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as of wheat for each crate of olive oil it exports to Ireland. long as it 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 olive oil) would allow both Liechtenstein and Ireland to gain from trade? Check all that apply. 1 crate of olive oil per bushel of wheat 2 crates of olive oil per bushel of wheat 7 crates of olive oil per bushel of wheat 15 crates of olive oil per bushel of wheat

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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