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6. Terms of trade Suppose that Portugal and Switzerland both produce beer and olives. Portugal's opportunity cost of producing a crate of olives is 4 barrels of beer, while Switzerland's opportunity cost of producing a crate of olives is 10 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 Portugal and Switzerland consider trading olives and beer with each other. Portugal can gain from specialization and trade as long as it receives more than of beer for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it of olives for each barrel of beer it exports to Portugal. receives more than Based on your answers to the previous question, which of the following terms of trade (that is, price of olives in terms of beer) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 9 barrels of beer per crate of olives 1 barrel of beer per crate of olives 18 barrels of beer per crate of olives ☐ 6 barrels of beer per crate of olives

6. Terms of trade Suppose that Portugal and Switzerland both produce beer and olives. Portugal's opportunity cost of producing a crate of olives is 4 barrels of beer, while Switzerland's opportunity cost of producing a crate of olives is 10 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 Portugal and Switzerland consider trading olives and beer with each other. Portugal can gain from specialization and trade as long as it receives more than of beer for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it of olives for each barrel of beer it exports to Portugal. receives more than Based on your answers to the previous question, which of the following terms of trade (that is, price of olives in terms of beer) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 9 barrels of beer per crate of olives 1 barrel of beer per crate of olives 18 barrels of beer per crate of olives ☐ 6 barrels of beer per crate of olives

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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6. Terms of trade Suppose that Portugal and Switzerland both produce beer and olives. Portugal's opportunity cost of producing a crate of olives is 4 barrels of beer, while Switzerland's opportunity cost of producing a crate of olives is 10 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 Portugal and Switzerland consider trading olives and beer with each other. Portugal can gain from specialization and trade as long as it receives more than of beer for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it of olives for each barrel of beer it exports to Portugal. receives more than Based on your answers to the previous question, which of the following terms of trade (that is, price of olives in terms of beer) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 9 barrels of beer per crate of olives 1 barrel of beer per crate of olives 18 barrels of beer per crate of olives ☐ 6 barrels of beer per crate of olives
Transcribed Image Text:6. Terms of trade Suppose that Portugal and Switzerland both produce beer and olives. Portugal's opportunity cost of producing a crate of olives is 4 barrels of beer, while Switzerland's opportunity cost of producing a crate of olives is 10 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 Portugal and Switzerland consider trading olives and beer with each other. Portugal can gain from specialization and trade as long as it receives more than of beer for each crate of olives it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it of olives for each barrel of beer it exports to Portugal. receives more than Based on your answers to the previous question, which of the following terms of trade (that is, price of olives in terms of beer) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 9 barrels of beer per crate of olives 1 barrel of beer per crate of olives 18 barrels of beer per crate of olives ☐ 6 barrels of beer per crate of olives
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