Question

Suppose that France and Austria both produce jeans and wine. France's opportunity cost of producing a...

Suppose that France and Austria both produce jeans and wine. France's opportunity cost of producing a bottle of wine is 3 pairs of jeans while Austria's opportunity cost of producing a bottle of wine is 11 pairs of jeans. By comparing the opportunity cost of producing wine in the two countries, you can tell that has a comparative advantage in the production of wine and has a comparative advantage in the production of jeans. Suppose that France and Austria consider trading wine and jeans with each other. France can gain from specialization and trade as long as it receives more than of jeans for each bottle of wine it exports to Austria. Similarly, Austria can gain from trade as long as it receives more than of wine for each pair of jeans it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of jeans) would allow both Austria and France to gain from trade? Check all that apply. 2 pairs of jeans per bottle of wine 4 pairs of jeans per bottle of wine 1 pair of jeans per bottle of wine 6 pairs of jeans per bottle of wine

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

By comparing the opportunity cost of producing wine in the two countries, you can tell that France has a comparative advantage in the production of wine (lower opportunity cost in terms of pairs of jeans) and Austria has a comparative advantage in the production of jeans.

France can gain from specialization and trade as long as it receives more than 3 pairs of jeans for each bottle of wine it exports to Austria. Similarly, Austria can gain from trade as long as it receives more than 1/11 bottle of wine for each pair of jeans it exports to France.

Correct options:

- 4 pairs of jeans per bottle of wine

- 6 pairs of jeans per bottle of wine

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that Portugal and Denmark both produce jeans and stained glass. Portugal's opportunity cost of producing...
Suppose that Portugal and Denmark both produce jeans and stained glass. Portugal's opportunity cost of producing a pane of stained glass is 3 pairs of jeans while Denmark's opportunity cost of producing a pane of stained glass is 11 pairs of jeans. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that ____(Portuga or Denmark) has a comparative advantage in the production of stained glass and _____ (Denmark or Portugal) has a comparative...
Suppose that Spain and Sweden both produce fish and wine. Spain's opportunity cost of producing a...
Suppose that Spain and Sweden both produce fish and wine. Spain's opportunity cost of producing a bottle of wine is 4 pounds of fish while Sweden's opportunity cost of producing a bottle of wine is 10 pounds of fish. By comparing the opportunity cost of producing wine in the two countries, you can tell that ( spain or sweden ) has a comparative advantage in the production of wine and ( spain or sweden ) has a comparative advantage in...
Suppose that Spain and Denmark both produce rye and shoes. Spain's opportunity cost of producing a...
Suppose that Spain and Denmark both produce rye and shoes. Spain's opportunity cost of producing a pair of shoes is 3 bushels of rye while Denmark'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 that has a comparative advantage in the production of shoes and has a comparative advantage in the production of rye. Suppose that Spain and Denmark consider...
Suppose that Portugal and Sweden both produce fish and olives. Portugal's opportunity cost of producing a...
Suppose that Portugal and Sweden both produce fish and olives. Portugal's opportunity cost of producing a crate of olives is 3 pounds of fish while Sweden's opportunity cost of producing a crate of olives is 9 pounds of fish. By comparing the opportunity cost of producing olives in the two countries, you can tell that ( portugal/ Sweden) has a comparative advantage in the production of olives and ( Portugal/ Sweden) has a comparative advantage in the production of fish....
The United States and France both enjoy wine and pasta and currently each country produces both...
The United States and France both enjoy wine and pasta and currently each country produces both goods. France can produce 10,000 pounds of pasta or 15,000 bottles of wine per month. The U.S. can produce 24,000 pounds of pasta or 18,000 bottles of wine per month. a. Does either country have an absolute advantage at producing wine or pasta? b. Calculate the comparative advantage for both countries for pasta and wine. c. Explain who should specialize in producing wine and...
Consider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours...
Consider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours available per week that they can use to produce corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using 1 hour of labor. Country Corn Jeans (Bushels per hour of labor) (Pairs per hour of labor) Dolorium 5 20 Arcadia 8 16 Initially, suppose Arcadia uses 1 million hours of labor per...
Assume that Japan and France each have 1,000 production units. With one production unit, Japan can...
Assume that Japan and France each have 1,000 production units. With one production unit, Japan can produce either 10 containers of toys or 7 cases of wine. Japan can produce either 2 cases of toys or 7 cases of wine. Thus, a production unit in Japan is 5 times as efficient compared to France when producing toys, but equally efficient when producing wine. Assume at first that no trade takes place. Japan allocates 800 producing units to building toys and...
France can produce 7 airplanes or 12 bottles of wine (and every linear combination in between)...
France can produce 7 airplanes or 12 bottles of wine (and every linear combination in between) per person. Similarly, the USA can produce 8 airplanes or 16 bottles of wine per person. Who has absolute advantage in each good? Who has comparative advantage in each good (if anyone)? Write your answer on paper and upload a picture
3. Gains from trade Consider two neighboring island countries called Dolorium and Arcadia. They each have...
3. Gains from trade Consider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Country Rye Jeans (Bushels per hour of labor) (Pairs per hour of labor) Dolorium 5 20 Arcadia 8 16 Initially, suppose Arcadia uses 1 million...
Consider two neighboring island countries called Felicidad and Contente. They each have 4 million labor hours...
Consider two neighboring island countries called Felicidad and Contente. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Country Rye Jeans (Bushels per hour of labor) (Pairs per hour of labor) Felicidad 5 20 Contente 8 16 Initially, suppose Contente uses 1 million hours of labor per...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT