help Suppose that Sweden and Greece both produce fish and wine. Sweden\'s opport

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Suppose that Sweden and Greece both produce fish and wine. Sweden's opportunity cost of producing a bottle of wine is 8 pounds of fish, while Greece's opportunity cost of producing a bottle of wine is 5 pounds of fish. By comparing the opportunity costs 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 fish. Suppose that Greece and Sweden consider trading wine and fish with each other. Greece can gain from specialization and trade as long as it receives more than of fish for each bottle of wine it exports to Sweden. Similarly, Sweden can gain from trade as long as it receives more than of wine for each pound of fish it exports to Greece. Based on your answer to the last question, which of the following terms of trade (that is, price of wine in terms of fish) would allow both Sweden and Greece to gain from trade? Check all that apply. 1 pound of fish per bottle of wine 9 pounds of fish per bottle of wine 4 pounds of fish per bottle of wine 7 pounds of fish per bottle of wine

Explanation / Answer

1 GREECE

2 SWEEDEN

3OPPORTUNITY COST

4 OPPORTUNITY COST

5 7 POUNDS OF FISH PER BOTTLE OF WINE

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