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Suppose that Poland and Luxembourg both produce sunowers and glass. Poland's opportunity cost of producing a pane of glass is 5 bushels of sunflowers while
Suppose that Poland and Luxembourg both produce sunowers and glass. Poland's opportunity cost of producing a pane of glass is 5 bushels of sunflowers while Luxembourg's opportunity cost of producing a pane of glass is 11 bushels of sunowers. By comparing the opportunity cost of producing glass in the two countries, you can tell that Poland V has a comparative advantage in the production of glass and Luxembourg 7 has a comparative advantage in the production of sunowers. Suppose that Poland and Luxembourg consider trading glass and sunowers with each other. Poland can gain from specialization and trade as long as it receives more than V of sunowers for each pane of glass it exports to Luxembourg. Similarly, Luxembourg can gain from trade as long as it receives more than v of glass for each bushel of sunowers it exports to Poland. Based on your answer to the last question, which of the following prices of trade {that is, price of glass in terms of sunowers) would allow both Luxembourg and Poland to gain from trade? Check all that apply. |:l 10 bushels of sunflowers per pane of glass |:l 15 bushels of sunflowers per pane of glass |:l 1 bushel of sunflowers per pane of glass |:l ? bushels of sunowers per pane of glass
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