3. Terms of trade Suppose that Portugal and Austria both produce beer and cheese. Portugal's opportunity cost of produci

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3 Terms Of Trade Suppose That Portugal And Austria Both Produce Beer And Cheese Portugal S Opportunity Cost Of Produci 1 (80.75 KiB) Viewed 20 times

3. Terms of trade Suppose that Portugal and Austria both produce beer and cheese. Portugal's opportunity cost of producing a pound of cheese is 3 barrels of beer while Austria's opportunity cost of producing a pound of cheese is 11 barrels of beer. By comparing the opportunity cost of producing cheese in the two countries, you can tell that production of cheese and has a comparative advantage in the production of beer. Suppose that Portugal and Austria consider trading cheese and beer with each other. Portugal can gain from specialization and trade as long as it receives more than of beer for each pound of cheese it exports to Austria. Similarly, Austria can gain from trade as long as it of cheese for each barrel of beer it exports to Portugal. receives more than Based on your answer to the last question, which of the following terms of trade (that is, price of cheese in terms of beer) would allow both Austria and Portugal to gain from trade? Check all that apply. 13 barrels of beer per pound of cheese 2 barrels of beer per pound of cheese has a comparative advantage in the 6 barrels of beer per pound of cheese O4 barrels of beer per pound of cheese