Suppose that Spain and Germany both produce rye and shoes. Spain's opportunity cost of producing a pair of shoes is 5 bushels of rye while Germany's opportunity cost of producing a pair of shoes is 10 bushels of rye. By comparing the opportunity cost of producing shoes in the two countries, you can tell thatSpain has a comparative advantage in the production of shoes andGermany has a comparative advantage in the production of rye. Suppose that Spain and Germany consider trading shoes and rye with each other. Spain can gain from specialization and trade as long as it receives more than5 bushels of rye for each pair of shoes it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than1/10 pair of shoes for each bushel of rye it exports to Spain. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of rye) would allow both Germany and Spain to gain from trade?a. 9 bushels of rye per pair of shoes b. 3 bushels of rye per pair of shoes c. 1 bushel of rye per pair of shoes d. 8 bushels of rye per pair of shoes
Solved
Show answers
More tips
- H Health and Medicine Everything You Wanted to Know About Male Circumcision: Its Goals and Effects...
- L Leisure and Entertainment Couchsurfing: A New Way to Travel...
- G Goods and services Which TV is better - LCD or Plasma?...
- S Sport How to Learn to Pull Up on Monkey Bars?...
- L Leisure and Entertainment Scrapbooking: What is it and Why is it Becoming More Popular?...
- C Computers and Internet Where did torrents.ru move to?...
- B Business and Finance Understanding Cash Flow: What It Is and How It Works...
- C Computers and Internet What Are Peers and Seeds in Torrenting?...
- H Health and Medicine 10 Simple Techniques on How to Boost Your Mood...
- G Goods and services How to Choose the Right High Chair for Your Baby?...
Answers on questions: Business
- B Business Tim worker went to his bank. he deposited $72.15 and the teller credited $5.79 to his account for interest. if tim s initial balance was $1,226.14, what will his new...
- B Business The fed s eclecticism reflects a.changes in the targets the fed sets for adjusting monetary policy. b.fixed rules that are set for monetary growth rates. c. guidance...
- B Business An authoritarian leadership style is rarely effective in business. true or false...
- B Biology Why is the fetus especially at risk when exposed to radiation?...
- M Mathematics Arestaurant used 15 pounds of ground beef to make hamburgers for the day. how many burgers did they make if each burger is 6 ounces? (16 ounces = 1 pound) explain your...
- P Physics An object falls for 1.7 seconds. assuming uniform acceleration, how far has it moved?...
- A Arts Summarize the pomo legend, explaining the significance of the basket....
- M Mathematics How many time trails were recorded during the...
- M Mathematics Maya s construction company builds houses. the number of bricks her crew installs varies directly with the number of hours they work....
- E English My mother insists that psychics are not truly she does admire their of understanding people and knowing what their customers want to hear...
Ответ: