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(Solved): Suppose that Croatia and Slovakia both produce beets and wheat. Croatia's opportunity cost of prod ...



Suppose that Croatia and Slovakia both produce beets and wheat. Croatias opportunity cost of producing a bushel of wheat is

Suppose that Croatia and Slovakia both produce beets and wheat. Croatia's opportunity cost of producing a bushel of wheat is 5 bushels of beets while Slovakia's opportunity cost of producing a bushel of wheat is 11 bushels of beets. By comparing the opportunity cost of producing wheat in the two countries, you can tell that has a comparative advantage in the production of wheat and has a comparative advantage in the production of beets. Suppose that Croatia and Slovakia consider trading wheat and beets with each other. Croatia can gain from specialization and trade as it receives more than of wheat for each bushel of beets it exports to Croatia. Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Slovakia and Croatia to gain from trade? Check all that apply. 3 bushels of beets per bushel of wheat 7 bushels of beets per bushel of wheat 15 bushels of beets per bushel of wheat 1 bushel of beets per bushel of wheat


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