(Solved): 5. The price of trade Suppose that Hungary and Liechtenstein both produce boots and glass. Hungary ...

5. The price of trade Suppose that Hungary and Liechtenstein both produce boots and glass. Hungary's opportunity cost of producing a pane of glass is 5 pairs of boots while Liechtenstein's opportunity cost of producing a pane of glass is 11 pairs of boots. By comparing the opportunity cost of producing glass in the two countries, you can tell that has a comparative advantage in the production of glass and has a comparative advantage in the production of boots. Suppose that Hungary and Liechtenstein consider trading glass and boots with each other. Hungary can gain from specialization and trade as long as it receives more than of boots for each pane of glass it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as long as it receives more than of glass for each pair of boots it exports to Hungary. Based on your answer to the last question, which of the following prices of trade (that is, price of glass in terms of boots) would allow both Liechtenstein and Hungary to gain from trade? Check all that apply. 1 pair of boots per pane of glass 7 pairs of boots per pane of glass 9 pairs of boots per pane of glass 15 pairs of boots per pane of glass