The price of trade ppose that Italy and Switzerland both produce jeans and stained glass. Italy's opportunity cost of producing a pane of stalned glass is 3 pairs of ans while Switzerland's opportunity cost of producing a pane of stained glass is 9 pairs of jeans. comparing the opportunity cost of producing stained glass in the two countries, you can tell that me production of stained glass and has a comparative advantage in has a comparative advantage in the production of Jeans. uppose that Italy and Switzerland consider trading stained glass and jeans with each other. Italy can gain from specialization and trade as long as it mceives more than s it recelves more than of jeans for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from trade as long of stained glass for each pair of jeans it exports to Italy. osed 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 switzeriand and Italy to gain from trade? Check all that apply. O 17 pairs of jeans per pane of stained glass O 1 pair of jeans per pane of stained glass O 8 pairs of Jeans per pane of stained glass D4 pairs of jeans per pane of stained glass
The price of trade ppose that Italy and Switzerland both produce jeans and stained glass. Italy's opportunity cost of producing a pane of stalned glass is 3 pairs of ans while Switzerland's opportunity cost of producing a pane of stained glass is 9 pairs of jeans. comparing the opportunity cost of producing stained glass in the two countries, you can tell that me production of stained glass and has a comparative advantage in has a comparative advantage in the production of Jeans. uppose that Italy and Switzerland consider trading stained glass and jeans with each other. Italy can gain from specialization and trade as long as it mceives more than s it recelves more than of jeans for each pane of stained glass it exports to Switzerland. Similarly, Switzerland can gain from trade as long of stained glass for each pair of jeans it exports to Italy. osed 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 switzeriand and Italy to gain from trade? Check all that apply. O 17 pairs of jeans per pane of stained glass O 1 pair of jeans per pane of stained glass O 8 pairs of Jeans per pane of stained glass D4 pairs of jeans per pane of stained glass
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:5. The price of trade
Suppose that Italy and Switzerland both produce jeans and stained glass. Italy's opportunity cost of producing a pane of stained glass is 3 pairs of
jeans while Switzeriand's opportunity cost of producing a pane of stained glass is 9 pairs of jeans.
By comparing the opportunity cost of producing stained glass in the two countries, you can tell that
has a comparative advantage in
the production of stained glass and
has a comparative advantage in the production of jeans.
Suppose that Italy and Switzerland consider trading stained glass and jeans with each other. Italy 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 trade as long
of stained glass for each pair of jeans it exports to Italy.
as it recelves more than
Based on your answer to the last question, which of the tollowing prices of trade (that is, price of stained glass in terms of jeans) would allow both
Switzerland and Italy to gain from trade? Check all that apply.
O 17 pairs of jeans per pane of stained glass
O1 pair of jeans per pane of stained glass
O s pairs of Jeans per pane of stalned glass
D 4 pairs of Jeans per pane of stained glass
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