Opportunity cost of producing a pound

Assignment Help Business Economics

Reference no: EM131000000

Suppose that France and Germany both produce oil and cheese. France's opportunity cost of producing a pound of cheese is 5 barrels of oil while Germany's opportunity cost of producing a pound of cheese is 11 barrels of oil. By comparing the opportunity cost of producing cheese in the two countries, you can tell that France has a comparative advantage in the production of cheese and Germany has a comparative advantage in the production of oil. Suppose that France and Germany consider trading cheese and oil with each other. France can gain from specialization and trade as long as it receives more than5 barrels of oil for each pound of cheese it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than11 pounds of cheese for each barrel of oil it exports to France. Based on your answer to the last question, which of the following terms of trade (that is, price of cheese in terms of oil) would allow both Germany and France to gain from trade? Check all that apply.

Reference no: EM131000000

Questions Cloud

Describe some of the potential opportunity costs : For each of the following, describe some of the potential opportunity costs:

Find the equilibrium level of employment : Consider an economy in which the labor demand function is 40 - (W/P), the labor supply function is 40 + (W/P), the production is Y = 30 + 12L. Suppose the money supply is $333 and the velocity is 4. What is the equilibrium level of employment L* and ..

Economy as measured by changes in real GDP : Which would have the most significant effect on the U.S. economy as measured by changes in real GDP?

If lenders expect a higher rate of inflation : If lenders expect a higher rate of inflation, then

Opportunity cost of producing a pound : Suppose that France and Germany both produce oil and cheese. France's opportunity cost of producing a pound of cheese is 5 barrels of oil while Germany's opportunity cost of producing a pound of cheese is 11 barrels of oil. France can gain from speci..

Find the normal force n on the car at the top of the hill : Draw a free body diagram of the car at the top of the hill. Graph the cart's momentum versus time from t0= 0 to tf. Find the normal force N on the car at the top of the hill.

Evaluate the role played by contract auditors : Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

Describe the specific security concerns or risks : Describe the specific security concerns or risks that your chosen operating system is exposed to and how you plan to mitigate the risk that each one presents

Prepare the journal entry to record the december : Prepare the journal entry to record the December 15 purchase for cash assuming the following alternative unit market prices on that date: a. $10.50, b. $ 9.50.

User Account

All Pages