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5. The price of trade Suppose that Hungary and Luxembourg both produce sunflowers and broccoli. Hungary's opportunity cost of producing a bushel of broccoli is 4 bushels of sunflowers while Luxembourg's opportunity cost of producing a bushel of broccoli is 12 bushels of sunflowers. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of sunflowers. has a comparative advantage in the Suppose that Hungary and Luxembourg consider trading broccoli and sunflowers with each other. Hungary can gain from specialization and trade as long as it receives more than of sunflowers for each bushel of broccoli it exports to Luxembourg. Similarly, Luxembourg can gain of broccoli for each bushel of sunflowers it exports to Hungary. from 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 broccoli in terms of sunflowers) would allow both Luxembourg and Hungary to gain from trade? Check all that apply. 8 bushels of sunflowers per bushel of broccoli 1 bushel of sunflowers per bushel of broccoli 14 bushels of sunflowers per bushel of broccoli 11 bushels of sunflowers per bushel of brocoli

5. The price of trade Suppose that Hungary and Luxembourg both produce sunflowers and broccoli. Hungary's opportunity cost of producing a bushel of broccoli is 4 bushels of sunflowers while Luxembourg's opportunity cost of producing a bushel of broccoli is 12 bushels of sunflowers. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of sunflowers. has a comparative advantage in the Suppose that Hungary and Luxembourg consider trading broccoli and sunflowers with each other. Hungary can gain from specialization and trade as long as it receives more than of sunflowers for each bushel of broccoli it exports to Luxembourg. Similarly, Luxembourg can gain of broccoli for each bushel of sunflowers it exports to Hungary. from 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 broccoli in terms of sunflowers) would allow both Luxembourg and Hungary to gain from trade? Check all that apply. 8 bushels of sunflowers per bushel of broccoli 1 bushel of sunflowers per bushel of broccoli 14 bushels of sunflowers per bushel of broccoli 11 bushels of sunflowers per bushel of brocoli

Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
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3 5. The price of trade Suppose that Hungary and Luxembourg both produce sunflowers and broccoli. Hungary's opportunity cost of producing a bushel of broccoli is 4 bushels of sunflowers while Luxembourg's opportunity cost of producing a bushel of broccoli is 12 bushels of sunflowers. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of sunflowers. has a comparative advantage in the Suppose that Hungary and Luxembourg consider trading broccoli and sunflowers with each other. Hungary can gain from specialization and trade as long as it receives more than of sunflowers for each bushel of broccoli it exports to Luxembourg. Similarly, Luxembourg can gain of broccoli for each bushel of sunflowers it exports to Hungary. from 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 broccoli in terms of sunflowers) would allow both Luxembourg and Hungary to gain from trade? Check all that apply. 8 bushels of sunflowers per bushel of broccoli 1 bushel of sunflowers per bushel of broccoli 14 bushels of sunflowers per bushel of broccoli 11 bushels of sunflowers per bushel of broccoli
Transcribed Image Text:3 5. The price of trade Suppose that Hungary and Luxembourg both produce sunflowers and broccoli. Hungary's opportunity cost of producing a bushel of broccoli is 4 bushels of sunflowers while Luxembourg's opportunity cost of producing a bushel of broccoli is 12 bushels of sunflowers. By comparing the opportunity cost of producing broccoli in the two countries, you can tell that production of broccoli and has a comparative advantage in the production of sunflowers. has a comparative advantage in the Suppose that Hungary and Luxembourg consider trading broccoli and sunflowers with each other. Hungary can gain from specialization and trade as long as it receives more than of sunflowers for each bushel of broccoli it exports to Luxembourg. Similarly, Luxembourg can gain of broccoli for each bushel of sunflowers it exports to Hungary. from 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 broccoli in terms of sunflowers) would allow both Luxembourg and Hungary to gain from trade? Check all that apply. 8 bushels of sunflowers per bushel of broccoli 1 bushel of sunflowers per bushel of broccoli 14 bushels of sunflowers per bushel of broccoli 11 bushels of sunflowers per bushel of broccoli
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