5. The price of trade Suppose that Croatia and Liechtenstein both produce ale and liquor. Croatia's opportunity cost of producing a case of liquor is 4 kegs of ale while Liechtenstein's opportunity cost of producing a case of liquor is 12 kegs of ale. By comparing the opportunity cost of producing liquor in the two countries, you can tell that production of liquor and Liechtenstein has a comparative advantage in the production Croatia has a comparative advantage in the Croatia Suppose that Croatia and Liechtenstein consider trading liquor and ale with each other. Croat Liechtenstein specialization and trade as long as it receives more than of ale for each case of liquor it exports to Liechtenstein. Simmary, ciechtenstein can gain from trade as long as it of liquor for each keg of ale it exports to Croatia. receives more than 2 kegs of ale per case of liquor 7 kegs of ale per case of liquor 16 kegs of ale per case of liquor 5 kegs of ale per case of liquor Based on your answer to the last question, which of the following prices of trade (that is, price of liquor in terms of ale) would allow both Liechtenstein and Croatia to gain from trade? Check all that apply.

5. The price of trade Suppose that Croatia and Liechtenstein both produce ale and liquor. Croatia's opportunity cost of producing a case of liquor is 4 kegs of ale while Liechtenstein's opportunity cost of producing a case of liquor is 12 kegs of ale. By comparing the opportunity cost of producing liquor in the two countries, you can tell that production of liquor and Liechtenstein has a comparative advantage in the production Croatia has a comparative advantage in the Croatia Suppose that Croatia and Liechtenstein consider trading liquor and ale with each other. Croat Liechtenstein specialization and trade as long as it receives more than of ale for each case of liquor it exports to Liechtenstein. Simmary, ciechtenstein can gain from trade as long as it of liquor for each keg of ale it exports to Croatia. receives more than 2 kegs of ale per case of liquor 7 kegs of ale per case of liquor 16 kegs of ale per case of liquor 5 kegs of ale per case of liquor Based on your answer to the last question, which of the following prices of trade (that is, price of liquor in terms of ale) would allow both Liechtenstein and Croatia to gain from trade? Check all that apply.

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains Rrom Trade

Section: Chapter Questions

Problem 9PA

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