Suppose that Portugal and Switzerland both produce jeans and stained glass. Portugal's opportunity cost of producing a pane of stained glass is 4. pairs of jeans while Switzerland's opportunity cost of producing a pane of stained glass is 10 pairs of jeans. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that the production of stained glass and has a comparative advantage in the production of jeans. Suppose that Portugal and Switzerland consider trading stained glass and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than of jeans for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from of stained glass for each pair of jeans it exports to Portugal. trade as long as it receives more than has a comparative advantage in Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of jeans) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 6 pairs of jeans per pane of stained glass 8 pairs of jeans per pane of stained glass

ENGR.ECONOMIC ANALYSIS
14th Edition
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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Suppose that Portugal and Switzerland both produce jeans and stained glass. Portugal's opportunity cost of producing a pane of stained glass is 4
pairs of jeans while Switzerland's opportunity cost of producing a pane of stained glass is 10 pairs of jeans.
By comparing the opportunity cost of producing stained glass in the two countries, you can tell that
the production of stained glass and
has a comparative advantage in the production of jeans.
Suppose that Portugal and Switzerland consider trading stained glass and jeans with each other. Portugal can gain from specialization and trade as
long as it receives more than
of jeans for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from
of stained glass for each pair of jeans it exports to Portugal.
trade as 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 stained glass in terms of jeans) would allow both
Switzerland and Portugal to gain from trade? Check all that apply.
6 pairs of jeans per pane of stained glass
8 pairs of jeans per pane of stained glass
has a comparative advantage in
2 pairs of jeans per pane of stained glass
18 pairs of jeans per pane of stained glass
Transcribed Image Text:Suppose that Portugal and Switzerland both produce jeans and stained glass. Portugal's opportunity cost of producing a pane of stained glass is 4 pairs of jeans while Switzerland's opportunity cost of producing a pane of stained glass is 10 pairs of jeans. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that the production of stained glass and has a comparative advantage in the production of jeans. Suppose that Portugal and Switzerland consider trading stained glass and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than of jeans for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from of stained glass for each pair of jeans it exports to Portugal. trade as 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 stained glass in terms of jeans) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 6 pairs of jeans per pane of stained glass 8 pairs of jeans per pane of stained glass has a comparative advantage in 2 pairs of jeans per pane of stained glass 18 pairs of jeans per pane of stained glass
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