3. Terms of trade Suppose that France and Denmark both produce oil and cheese. France's opportunity cost of producing a pound of cheese is 4 barrels of oil while Denmark's opportunity cost of producing a pound of cheese is 10 barrels of oil. By comparing the opportunity cost of producing cheese in the two countries, you can tell that has a comparative advantage in the production of cheese and has a comparative advantage in the production of oil. Suppose that France and Denmark consider trading cheese and oil with each other. France can gain from specialization and trade as long as it receives more than of oil for each pound of cheese it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of cheese for each barrel of oil it exports to France. Based on your answer to the last question, which of the following terms of trade (that is, price of cheese in terms of oil) would allow both Denmark and France to gain from trade? Check all that apply. 1 barrel of oil per pound of cheese 2 barrels of oil per pound of cheese 6 barrels of oil per pound