Question

A German worker takes 500 hours to produce a car and 5 hours to produce a case of wine. A French worker takes 400 hours to produce a car and XX hours to produce a case of wine.

For what values of XX will gains from trade be possible? Check all that apply.

2

3

4

800

For what values of XX will Germany export cars and import wine? Check all that apply.

2

3

800

Answer 1

Values of xx for which gains from trade possible:- 2 & 3

For these values Germany will have comparative advantage in producing cars and france will have comparative advantage in producing wines, so gains from trade will be possible.

For what values of XX will Germany export cars and import wine?

Answer:- 2 & 3

For these values of xx Germany will have comparative advantage in producing cars.