Reference no: EM131202020
Terms of trade
Suppose that Portugal and Germany both produce oil and olives. Portugal's opportunity cost of producing a crate of olives is 3 barrels of oil while Germany's opportunity cost of producing a crate of olives is 10 barrels of oil.
By comparing the opportunity cost of producing olives in the two countries, you can tell that Portugal has a comparative advantage in the production of olives and Germany has a comparative advantage in the production of oil.
Suppose that Portugal and Germany consider trading olives and oil with each other. Portugal can gain from specialization and trade as long as it receives more than3 barrels of oil for each crate of olives it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than1/10 crate of olives for each barrel of oil it exports to Portugal.
Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of oil) would allow both Germany and Portugal to gain from trade? Check all that apply.
2 barrels of oil per crate of olives
1 barrel of oil per crate of olives
4 barrels of oil per crate of olives
18 barrels of oil per crate of olives
|
What was the geometric mean annual increase for the period
: JetBlue Airways is an American low-cost airline headquartered in New York City. Its main base is John F. Kennedy International Airport. JetBlue’s revenue in 2001 was $659.0 million. By 2009, revenue had increased to $3,320.8 million. What was the geo..
|
|
The federal reserve and monetary policy
: "The Federal Reserve and Monetary Policy" Visit the The Business News and please respond to the following: Part 1 What is the mission and legal mandate of the Federal Reserve System? What policy tools are available to the FED to achieve their mission..
|
|
Worth of these bonds
: A company has issued 10-year bonds, with a face value of $1,000,000, in $1,000 units.Interest at 8% is paid quarterly. If an investor desires to earn 12% nominal interest (compounded quarterly) on $10,000 worth of these bonds, what would the purchase..
|
|
What is the nature of oligopolies
: What is the nature of oligopolies? What is the nature of monopolies? What is the nature of monopolistic? What is the nature of pure competition?
|
|
Portugal and germany both produce oil and olives
: Suppose that Portugal and Germany both produce oil and olives. Portugal's opportunity cost of producing a crate of olives is 3 barrels of oil while Germany's opportunity cost of producing a crate of olives is 10 barrels of oil. Based on your answer t..
|
|
Shader tool provided initial to identify the initial surplus
: Use a supply and demand diagram to show how that response will change the combined amount of consumer surplus and producer surplus in the market for cashews. Given the initial equilibrium price P1 and quantity Q1, use the shader tool provided 'Initia..
|
|
Statements about bottled spring water
: Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the? firm's quantity supplied in the bottled water? market?
|
|
Identify two federal government programs
: Identify two federal government programs that you would definitely change. Explain why and how you would change them. What would be the marginal benefits and marginal costs of each changed policy TO YOU? What would be the marginal benefits and margin..
|
|
Evaluate the elasticity of demand
: Suppose that Demand is D = 10-2P, where P is price. (a) Evaluate the elasticity of demand at P = 2. (b) Evaluate the elasticity of Demand at P = 3. (c) Write the marginal revenue, evaluated at these two prices.
|