Suppose that spain and sweden both produce jeans and cheese. spain's opportunity cost of producing a pound of cheese is 5 pairs of jeans while sweden's opportunity cost of producing a pound of cheese is 10 pairs of jeans.
by comparing the opportunity cost of producing cheese in the two countries, you can tell that selector 1
sweden
spain
has a comparative advantage in the production of cheese and selector 2
sweden
spain
has a comparative advantage in the production of jeans.
points:
close explanation
explanation:
suppose that spain and sweden consider trading cheese and jeans with each other. spain can gain from specialization and trade as long as it receives more than selector 1
1 pair
1/10 pair
1/5 pair
5 pairs
10 pairs
of jeans for each pound of cheese it exports to sweden. similarly, sweden can gain from trade as long as it receives more than selector 2
1 pound
1/10 pound
1/5 pound
5 pounds
10 pounds
of cheese for each pair of jeans it exports to spain.
points:
close explanation
explanation:
based on your answer to the last question, which of the following terms of trade (that is, price of cheese in terms of jeans) would allow both sweden and spain to gain from trade? check all that apply.
9 pairs of jeans per pound of cheese
1 pair of jeans per pound of cheese
6 pairs of jeans per pound of cheese
2 pairs of jeans per pound of cheese