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korrinevbrulz2222
korrinevbrulz2222
24.01.2020 • 
Business

Suppose that greece and switzerland both produce oil and shoes. greece's opportunity cost of producing a pair of shoes is 4 barren of oil while switzerland's opportunity cost of producing a pair of shoes is 10 barrels of oil.
by comparing the opportunity cost of producing shoes in the two countries, you can tell that greece has a comparative advantage in the production of shoes and switzerland has a comparative advantage in the production of oil.
suppose that greece and switzerland consider trading shoes and oil with each other. greece can gain from specialization and trade as long as it receives more than 4 barrels of oil for each pair of shoes it exports to switzerland. similarly, switzerland can gain from trade as long as it receives more than 1 pair of shoes for each barrel of oil it exports to greece.

which of the following prices of trade (that is, the price of shoes in terms of oil) would allow both switzerland and greece to gain from trade? check all that apply.

a. 1 barrel of oil per pair of shoes
b. 2 barrels of oil per pair of shoes
c. 8 barrels of oil per pair of shoes
d. 18 barrels of oil per pair of shoes

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