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Business, 14.03.2020 05:15 deadmoney

The price of trade Suppose that Portugal and Switzzerland both produce rye and wine. Portugal's opportunity cost of producing a bottle of wine is 4 bushels of rye while Switzerland's opportunity cost of producing a bottle of wine is 10 bushels of rye. By comparing the opportunity cost of producing wine in the two countries, you can tell that production of wine and has a comparative advantage in the has a comparative advantage in the production of rye. Suppose that Portugal and Switzerland consider trading wine and rye with each other. Portugal can gain from specialization and trade as long as it of rye for each bottle of wine it exports to Switzerland. Similahr, Switzerland can gain from trade as long as it receives more than of wine for each bushel of rye it exports to Portugal. receives more than Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of rye) would allow both Switzerland and Portugal to gain from trade? Check all that apply. 1 bushel of rye per bottle of wine 6 bushels of rye per bottle of wine 9 bushels of rye per bottle of wine 18 bushels of rye per bottle of wine

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The price of trade Suppose that Portugal and Switzzerland both produce rye and wine. Portugal's oppo...
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