Suppose that Portugal and Denmark both produce jeans and shoes. Portugal's opportunity cost of producing a pair of shoes is 5 pairs of jeans while Denmark's opportunity cost of producing a pair of shoes is 10 pairs of jeans. By comparing the opportunity cost of producing wine in the two countries, you can tell thathas a comparative advantage in the production of wine andhas a comparative advantage in the production of jeans. Suppose that Portugal and Denmark consider trading wine and jeans with each other. Portugal can gain from specialization and trade as long as it receives more thanof jeans for each bottle of wine it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more thanof wine for each pair of jeans it exports to Portugal.
Based on this, which of the following prices of trade (that is, price of wine in terms of jeans) would allow both Denmark and Portugal to gain from trade? a. 1 pair of jeans per bottle of wineb. 2 pairs of jeans per bottle of winec. 8 pairs of jeans per bottle of wined. 18 pairs of jeans per bottle of wine