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Suppose that Greece and Germany both produce sh and olives. Greece's opportunity cost of producing a crate of olives is 3 pounds of sh while
Suppose that Greece and Germany both produce sh and olives. Greece's opportunity cost of producing a crate of olives is 3 pounds of sh while Germany's opportunity cost of producing a crate of olives is 11 pounds of sh. By comparing the opportunity cost of producing olives in the two countries, you can tell that Germany 7 has a comparative advantage in the production of olives and Greece V has a comparave advantage in the production of sh. Suppose that Greece and Germany consider trading olives and sh with each other. Greece can gain from specialization and trade as long as it receives more than 11 pounds V of sh for each crate of olives it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than 1 crate V of olives for each pound of sh it exports to Greece. Based on your answer to the iast question, which of the following prices of trade {that is, price of olives in terms of sh) would allow both Germany and Greece to gain from trade? Check aii that appiy. D 2 pounds of sh per crate of olives Cl 1 pound of sh per crate of olives D 4 pounds of sh per crate of olives Cl 6 pounds of sh per crate of olives
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