5. The price of trade

Suppose that Spain and Switzerland both produce fish and cheese. Spain's opportunity cost of producing a pound of cheese is 4 pounds of fish while Switzerland's opportunity cost of producing a pound of cheese is 10 pounds of fish.

By comparing the opportunity cost of producing cheese in the two countries, you can tell that (Spain or Switzerland)has a comparative advantage in the production of cheese and(Spain/Switzerland)has a comparative advantage in the production of fish.

Suppose that Spain and Switzerland consider trading cheese and fish with each other. Spain can gain from specialization and trade as long as it receives more than (1 pound or 1/10 pound or 1/4 pound or 4 pounds or 10 pounds) of fish for each pound of cheese it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than(1 pound or 1/10 pound or 1/4 pound or 4 pounds or 10 pounds)of cheese for each pound of fish it exports to Spain.

Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of fish) would allow both Switzerland and Spain to gain from trade?Check all that apply.

a. 2 pounds of fish per pound of cheese

b. 7 pounds of fish per pound of cheese

c. 9 pounds of fish per pound of cheese

d. 16 pounds of fish per pound of cheese