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5. The price of trade Suppose that Hungary and Luxembourg both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 5 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 9 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Hungary and Luxembourg 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 Luxembourg. Similarly, Luxembourg can gain from trade as long as it of wheat for each pair of boots it exports to Hungary. receives more than 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 Luxembourg and Hungary to gain from trade? Check all that apply. 8 pairs of boots per bushel of wheat 7 pairs of boots per bushel of wheat 19 pairs of boots per bushel of wheat 1 pair of boots per bushel of wheat

5. The price of trade Suppose that Hungary and Luxembourg both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 5 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 9 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Hungary and Luxembourg 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 Luxembourg. Similarly, Luxembourg can gain from trade as long as it of wheat for each pair of boots it exports to Hungary. receives more than 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 Luxembourg and Hungary to gain from trade? Check all that apply. 8 pairs of boots per bushel of wheat 7 pairs of boots per bushel of wheat 19 pairs of boots per bushel of wheat 1 pair of boots per bushel of wheat

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 Hungary and Luxembourg both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 5 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 9 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Hungary and Luxembourg 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 Luxembourg. Similarly, Luxembourg can gain from trade as long as it of wheat for each pair of boots it exports to Hungary. receives more than 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 Luxembourg and Hungary to gain from trade? Check all that apply. 8 pairs of boots per bushel of wheat 7 pairs of boots per bushel of wheat 19 pairs of boots per bushel of wheat 1 pair of boots per bushel of wheat
Transcribed Image Text:5. The price of trade Suppose that Hungary and Luxembourg both produce boots and wheat. Hungary's opportunity cost of producing a bushel of wheat is 5 pairs of boots while Luxembourg's opportunity cost of producing a bushel of wheat is 9 pairs of boots. By comparing the opportunity cost of producing wheat in the two countries, you can tell that production of wheat and has a comparative advantage in the production of boots. has a comparative advantage in the Suppose that Hungary and Luxembourg 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 Luxembourg. Similarly, Luxembourg can gain from trade as long as it of wheat for each pair of boots it exports to Hungary. receives more than 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 Luxembourg and Hungary to gain from trade? Check all that apply. 8 pairs of boots per bushel of wheat 7 pairs of boots per bushel of wheat 19 pairs of boots per bushel of wheat 1 pair of boots per bushel of wheat
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