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Suppose that Hungary and Wales both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 4 pairs of boots while Wales's opportunity cost of producing a bushel of wheat is 12 pairs of boots.

Suppose that Hungary and Wales both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 4 pairs of boots while Wales's opportunity cost of producing a bushel of wheat is 12 pairs of boots.

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
Problem 5PA
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Suppose that Hungary and Wales both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 4 pairs of boots while Wales's opportunity cost of producing a bushel of wheat is 12 pairs of boots.

5. The price of trade Suppose that Hungary and Wales both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 4 pairs of boots while Wales's opportunity cost of producing a bushel of wheat is 12 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that Hungary production of wheat and Wales has a comparative advantage in the production of boots. Suppose that Hungary and Wales consider trading wheat and boots with each other. Hungary can gain from specialization and trade as long as it receives more than of boots for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of wheat for each pair of boots it exports to Hungary. Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Wales and Hungary to gain from trade? Check all that apply. 7 pairs of boots per bushel of wheat 2 pairs of boots per bushel of wheat boots per bushel whe has a comparative advantage in the 1 pair 16 pairs of boots per bushel of wheat
Transcribed Image Text:5. The price of trade Suppose that Hungary and Wales both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 4 pairs of boots while Wales's opportunity cost of producing a bushel of wheat is 12 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that Hungary production of wheat and Wales has a comparative advantage in the production of boots. Suppose that Hungary and Wales consider trading wheat and boots with each other. Hungary can gain from specialization and trade as long as it receives more than of boots for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives more than of wheat for each pair of boots it exports to Hungary. Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Wales and Hungary to gain from trade? Check all that apply. 7 pairs of boots per bushel of wheat 2 pairs of boots per bushel of wheat boots per bushel whe has a comparative advantage in the 1 pair 16 pairs of boots per bushel of wheat
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For your option under step 2; 4/12 and 12/4 isnt an option

Suppose that Hungary and Wales consider trading wheat and boots with each other. Hungary can gain from specialization and trade as long as it receives more than 4 pairs of boots for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives wheat for each pair of boots it exports to Hungary. more than 1 bus 1 pair Based on your answ 1/12 pairst question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Wales and Hungary to gain fro eck all that apply. ✔ 7 pairs of 2 pairs of 1/4 pair 4 pairs ushel of wheat ushel of wheat 12 pairs 1 pair of boots per bushel of wheat
Transcribed Image Text:Suppose that Hungary and Wales consider trading wheat and boots with each other. Hungary can gain from specialization and trade as long as it receives more than 4 pairs of boots for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it receives wheat for each pair of boots it exports to Hungary. more than 1 bus 1 pair Based on your answ 1/12 pairst question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Wales and Hungary to gain fro eck all that apply. ✔ 7 pairs of 2 pairs of 1/4 pair 4 pairs ushel of wheat ushel of wheat 12 pairs 1 pair of boots per bushel of wheat
Suppose that Hungary and Wales consider trading wheat and boots with each other. Hungary can gain from specialization and trade as long as it receives more than 4 pairs more than 1 bushel of boots for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it recei of wheat for each pair of boots it exports to Hungary. Based on y the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Wal Hungary to 1/12 bushel le? Check all that apply. ✔1/4 bushel 2 1 bushel 1 4 bushels 12 bushels per bushel of wheat per bushel of wheat ber bushel of wheat
Transcribed Image Text:Suppose that Hungary and Wales consider trading wheat and boots with each other. Hungary can gain from specialization and trade as long as it receives more than 4 pairs more than 1 bushel of boots for each bushel of wheat it exports to Wales. Similarly, Wales can gain from trade as long as it recei of wheat for each pair of boots it exports to Hungary. Based on y the last question, which of the following prices of trade (that is, price of wheat in terms of boots) would allow both Wal Hungary to 1/12 bushel le? Check all that apply. ✔1/4 bushel 2 1 bushel 1 4 bushels 12 bushels per bushel of wheat per bushel of wheat ber bushel of wheat
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