Hello! 4 fill in the blanks, and a multiple choice question. Thank you!!! :) Sup

Question

Hello! 4 fill in the blanks, and a multiple choice question. Thank you!!! :)

Suppose that France and Germany both produce jeans and olives. France's opportunity cost of producing a crate of olives is 4 pairs of jeans while Germany's opportunity cost of producing a crate of olives is 10 pairs of jeans. By comparing the opportunity cost of producing olives in the two countries, you can tell that has a comparative advantage in the production of olives and has a comparative advantage in the production of jeans. Suppose that France and Germany consider trading olives and jeans with each other. France can gain from specialization and trade as long as it receives more than of jeans for each crate of olives it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than of olives for each pair of jeans it exports to France. Based on your answer to the last question, which of the following terms of trade (that is, price of olives in terms of jeans) would allow both Germany and France to gain from trade? Check all that apply. 1 pair of jeans per crate of olives 18 pairs of jeans per crate of olives 3 pairs of jeans per crate of olives 9 pairs of jeans per crate of olives

Explanation / Answer

France

Germany

4 pairs of jeans

0.1 Crate of olives

9 pair of jeans per crate of olives

explantion

france can produce more nu. of olives than germany in same no. of labour and capital so it will produce olives and vise versa.

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