Suppose that Italy and Austria both produce beer and olives. Italy's opportunity cost of producing a crate of olives is 4 barrels of beer while Austria's opportunity cost of producing a crate of olives is 9 barrels of beer. By comparing the opportunity cost of producing olives in the two countries, you can tell that production of olives and has a comparative advantage in the production of beer. has a comparative advantage in the Suppose that Italy and Austria consider trading olives and beer with each other. Italy can gain from specialization and trade as long as it receives more than of beer for each crate of olives it exports to Austria. Similarly, Austria can gain from trade as long as it receives more than of olives for each barrel of beer it exports to Italy. Based on your answer to the last question, which of the following terms of trade (that is, price of olives in terms of beer) would allow both Austria and Italy to gain from trade? Check all that apply. 13 barrels of beer per crate of olives 1 barrel of beer per crate of olives 6 barrels of beer per crate of olives ☐ 7 barrels of beer per crate of olives

Suppose that Italy and Austria both produce beer and olives. Italy's opportunity cost of producing a crate of olives is 4 barrels of beer while Austria's opportunity cost of producing a crate of olives is 9 barrels of beer. By comparing the opportunity cost of producing olives in the two countries, you can tell that production of olives and has a comparative advantage in the production of beer. has a comparative advantage in the Suppose that Italy and Austria consider trading olives and beer with each other. Italy can gain from specialization and trade as long as it receives more than of beer for each crate of olives it exports to Austria. Similarly, Austria can gain from trade as long as it receives more than of olives for each barrel of beer it exports to Italy. Based on your answer to the last question, which of the following terms of trade (that is, price of olives in terms of beer) would allow both Austria and Italy to gain from trade? Check all that apply. 13 barrels of beer per crate of olives 1 barrel of beer per crate of olives 6 barrels of beer per crate of olives ☐ 7 barrels of beer 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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Similar questions

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.
In Japan, one worker can make 5 tons of rubber or 80 radios. In Malaysia, one worker can make 10 tons of rubber or 40 radios. Who has the absolute advantage in the production of rubber or radios? How can you tell? Calculate the opportunity cost of producing 80 additional radios in Japan and in Malaysia. (Your calculation may involve fractions, which is fine,) Which country has a comparative advantage in the production of radios? Calculate the opportunity cost of producing 10 additional tons of rubber in Japan and in Malaysia. Which country has a comparative advantage in producing rubber? In this example, does each country have an absolute advantage and a comparative advantage in the same good? In what product should Japan specialize? In what product should Malaysia specialize?
Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef In Brazil? What is the opportunity cost of producing one pound of beef in the United States?
In Germany it takes three workers to make one television and four workers to make one video camera. In Poland It takes six workers to make one television and 12 workers to make one video camera. Who has the absolute advantage in the production of televisions? Who has the absolute advantage in the production of video cameras? How can you tell? Calculate the opportunity cost of producing one additional television set in Germany and In Poland. (Your calculation may involve fractions, which Is tine.) Which country has a comparative advantage in the production of televisions? Calculate the opportunity cost of producing one video camera in Germany and in Poland. Which country has a comparative advantage in the production of video cameras? In this example, is absolute advantage the same as comparative advantage, or not? In what product should Germany specialize? In what product should Poland specialize?