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5. The price of trade Suppose that France and Denmark both produce oil and stained glass. France's opportunity cost of producing a pane of stained glass is 5 barrels of oil while Denmark's opportunity cost of producing a pane of stained glass is 10 barrels of oil. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that has a comparative advantage in the production of stained glass and has a comparative advantage in the production of oil. Suppose that France and Denmark consider trading stained glass and oil with each other. France can gain from specialization and trade as long as it receives more than of oil for each pane of stained glass it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than v of stained glass for each barrel of oil it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of oil) would allow both Denmark and France to gain from trade? Check all that apply. O 3 barrels of oil per pane of stained glass O 1 barrel of oil per pane of stained glass O 9 barrels of oil per pane of stained glass O 15 barrels of oil per pane of stained glass

5. The price of trade Suppose that France and Denmark both produce oil and stained glass. France's opportunity cost of producing a pane of stained glass is 5 barrels of oil while Denmark's opportunity cost of producing a pane of stained glass is 10 barrels of oil. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that has a comparative advantage in the production of stained glass and has a comparative advantage in the production of oil. Suppose that France and Denmark consider trading stained glass and oil with each other. France can gain from specialization and trade as long as it receives more than of oil for each pane of stained glass it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than v of stained glass for each barrel of oil it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of oil) would allow both Denmark and France to gain from trade? Check all that apply. O 3 barrels of oil per pane of stained glass O 1 barrel of oil per pane of stained glass O 9 barrels of oil per pane of stained glass O 15 barrels of oil per pane of stained glass

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
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5. The price of trade Suppose that France and Denmark both produce oil and stained glass. France's opportunity cost of producing a pane of stained glass is 5 barrels of oil while Denmark's opportunity cost of producing a pane of stained glass is 10 barrels of oil. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that v has a comparative advantage in the production of stained glass and has a comparative advantage in the production of oil. Suppose that France and Denmark consider trading stained glass and oil with each other. France can gain from specialization and trade as long as it receives more than of oil for each pane of stained glass it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of stained glass for each barrel of oil it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of oil) would allow both Denmark and France to gain from trade? Check all that apply. O 3 barrels of oil per pane of stained glass O 1 barrel of oil per pane of stained glass O 9 barrels of oil per pane of stained glass O 15 barrels of oil per pane of stained glass
Transcribed Image Text:5. The price of trade Suppose that France and Denmark both produce oil and stained glass. France's opportunity cost of producing a pane of stained glass is 5 barrels of oil while Denmark's opportunity cost of producing a pane of stained glass is 10 barrels of oil. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that v has a comparative advantage in the production of stained glass and has a comparative advantage in the production of oil. Suppose that France and Denmark consider trading stained glass and oil with each other. France can gain from specialization and trade as long as it receives more than of oil for each pane of stained glass it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of stained glass for each barrel of oil it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of stained glass in terms of oil) would allow both Denmark and France to gain from trade? Check all that apply. O 3 barrels of oil per pane of stained glass O 1 barrel of oil per pane of stained glass O 9 barrels of oil per pane of stained glass O 15 barrels of oil per pane of stained glass
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