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Suppose that Italy and Switzerland both produce fish and wine. Italy's opportunity cost of producing a bottle of wine is 5 pounds of fish while
Suppose that Italy and Switzerland both produce fish and wine. Italy's opportunity cost of producing a bottle of wine is 5 pounds of fish while Switzerland's opportunity cost of producing a bottle of wine is 10 pounds of fish. has a comparative advantage in the By comparing the opportunity cost of producing wine in the two countries, you can tell that production of wine and has a comparative advantage in the production of fish. Suppose that Italy and Switzerland consider trading wine and fish with each other. Italy can gain from specialization and trade as long as it receives more than of fish for each bottle of wine it exports to Switzerland. Similarly, Switzerland can gain from trade as long as it receives more than of wine for each pound of fish it exports to Italy. Based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of fish) would allow both Switzerland and Italy to gain from trade? Check all that apply. 0 6 pounds of fish per bottle of wine 02 pounds of fish per bottle of wine U 1 pound of fish per bottle of wine 12 pounds of fish per bottle of wine 8:09 PN
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