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Suppose that Greece and Sweden both produce fish and shoes. Greece's opportunity cost of producing a pair of shoes is 5 pounds of fish while Sweden's opportunity cost of producing a pair of shoes is 10 pounds of fish. By comparing the opportunity cost of producing shoes in the two countries, you can tell that has a comparative advantage in the production of shoes and has a comparative advantage in the production of fish. Suppose that Greece and Sweden consider trading shoes and fish with each other. Greece can gain from specialization and trade as long as it receives more than of shoes it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more than of fish for each pair of shoes for each pound of fish it exports to Greece. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of fish) would allow both Sweden and Greece to gain from trade? Check all that apply. 11 pounds of fish per pair of shoes 6 pounds of fish per pair of shoes 4 pounds of fish per pair of shoes 7 pounds of fish per pair of shoes

Suppose that Greece and Sweden both produce fish and shoes. Greece's opportunity cost of producing a pair of shoes is 5 pounds of fish while Sweden's opportunity cost of producing a pair of shoes is 10 pounds of fish. By comparing the opportunity cost of producing shoes in the two countries, you can tell that has a comparative advantage in the production of shoes and has a comparative advantage in the production of fish. Suppose that Greece and Sweden consider trading shoes and fish with each other. Greece can gain from specialization and trade as long as it receives more than of shoes it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more than of fish for each pair of shoes for each pound of fish it exports to Greece. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of fish) would allow both Sweden and Greece to gain from trade? Check all that apply. 11 pounds of fish per pair of shoes 6 pounds of fish per pair of shoes 4 pounds of fish per pair of shoes 7 pounds of fish per pair of shoes

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
Problem 5PA
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Suppose that Greece and Sweden both produce fish and shoes. Greece's opportunity cost of producing a pair of shoes is 5 pounds of fish while Sweden's opportunity cost of producing a pair of shoes is 10 pounds of fish. By comparing the opportunity cost of producing shoes in the two countries, you can tell that has a comparative advantage in the production of shoes and has a comparative advantage in the production of fish. Suppose that Greece and Sweden consider trading shoes and fish with each other. Greece can gain from specialization and trade as long as it receives more than of shoes it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more of fish for each pair than of shoes for each pound of fish it exports to Greece. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of fish) would allow both Sweden and Greece to gain from trade? Check all that аpply. 11 pounds of fish per pair of shoes 6 pounds of fish per pair of shoes 4 pounds of fish per pair of shoes 7 pounds of fish per pair of shoes
Transcribed Image Text:Suppose that Greece and Sweden both produce fish and shoes. Greece's opportunity cost of producing a pair of shoes is 5 pounds of fish while Sweden's opportunity cost of producing a pair of shoes is 10 pounds of fish. By comparing the opportunity cost of producing shoes in the two countries, you can tell that has a comparative advantage in the production of shoes and has a comparative advantage in the production of fish. Suppose that Greece and Sweden consider trading shoes and fish with each other. Greece can gain from specialization and trade as long as it receives more than of shoes it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more of fish for each pair than of shoes for each pound of fish it exports to Greece. Based on your answer to the last question, which of the following prices of trade (that is, price of shoes in terms of fish) would allow both Sweden and Greece to gain from trade? Check all that аpply. 11 pounds of fish per pair of shoes 6 pounds of fish per pair of shoes 4 pounds of fish per pair of shoes 7 pounds of fish per pair of shoes
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Comparative advantage is when a country is able to produce at a lower opportunity cost.

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