5. The price of trade Suppose that Portugal and Austria both produce jeans and olives. Portugal's opportunity cost of producing a crate of olives is 3 pairs of jeans while Austria's opportunity cost of producing a crate of olives is 9 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that has a comparative advantage in the production of jeans. production of olives and has a comparative advantage in the Suppose that Portugal and Austria consider trading olives and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than of jeans for each crate of olives it exports to Austria. Similarly, Austria can gain from trade as long as it of olives for each pair of jeans it exports to Portugal. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both Austria and Portugal to gain from trade? Check all that apply. 2 pairs of jeans per crate of olives 17 pairs of jeans per crate of olives 8 pairs of jeans per crate of olives 1 pair of jeans per crate of olives
5. The price of trade Suppose that Portugal and Austria both produce jeans and olives. Portugal's opportunity cost of producing a crate of olives is 3 pairs of jeans while Austria's opportunity cost of producing a crate of olives is 9 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that has a comparative advantage in the production of jeans. production of olives and has a comparative advantage in the Suppose that Portugal and Austria consider trading olives and jeans with each other. Portugal can gain from specialization and trade as long as it receives more than of jeans for each crate of olives it exports to Austria. Similarly, Austria can gain from trade as long as it of olives for each pair of jeans it exports to Portugal. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of jeans) would allow both Austria and Portugal to gain from trade? Check all that apply. 2 pairs of jeans per crate of olives 17 pairs of jeans per crate of olives 8 pairs of jeans per crate of olives 1 pair of jeans per crate of olives
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 30P: In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10...
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