Business, 31.03.2021 01:10 emily743

Suppose that Spain and Switzerland both produce beer and wine. Spain's opportunity cost of producing a bottle of wine is 4 brarrels of beer while Switzerland's opportunity cost of producing a bottle of wine is 10 barrels of beer. By comparing the opportunity cost of producing wine in the two countries, you can tell that has a comparative advantage int he production of wine and _ has a comparative advantage in the production of beer.
Suppose that Spain and Switzerland consider trading wine and beer with each other. Spain can gain from specialization and trade as long as it receives mroe that _ of beer for each bottle of wine it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than ___ of wine for each barrel of beer it exports to Spain.
Based on your answer to the last question, which of the folloiwing terms of trade ( that is, price of wine in terms of beer) would allow both Switzerland and Spain to gain from trade?
a. 6 barrels of beer per bottle of wine
b. 3 barrels of beer per bottle of wine
c. 9 barrels of beer per bottle of wine
d. 18 barrels of beer per bottle of wine

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Suppose that Spain and Switzerland both produce beer and wine. Spain's opportunity cost of producing...

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