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Osten, a village in Sweden which produces chevre (a type of cheese) and wool. There are 100 villagers who can make cheese, or can spin

Osten, a village in Sweden which produces chevre (a type of cheese) and wool. There are 100 villagers who can make cheese, or can spin wool. The OC for each worker for producing 1kg of this cheese is 1.5 kg of wool. Ylle is a village down the valley which also produces chevre and spins wool. There are also 100 villagers in Ylle and for these villagers the OC of producing 1kg of cheese is 17/12kg of wool. Given this information, it would be better for Osten to specialise in producing wool and the terms of trade between the villages will be 1kg of wool for 3kg of cheese.

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