Question

>of 11 Page ZOOM 6 b. a decrease in the price of blu ray players c. a change in consumer preferences toward watching movies in movie theaters rather than at home d. b and c would both cause this shift Table 3-2 Assume that Spain and Italy can switch between producing wine and producing olives at a constant rate. Labor Hours Needed to Make 1 Bottle of Wine Olives Spain Italy 4 10 2 23. Refer to Table 3-2. Spain should export a. wine and import olives b. olives and import wine. 3 both goods and import neither good d. neither good and import both goods c. _3_ 24. Refer to Table 3-2. Suppose that both countries fully specialize in the good in which they have a What is an comparative advantage. Both countries have 1,000 hours of labor to devote to production. example of a mutually beneficial trade? Spain gives 50 bottles of olives to Italy in exchange for 50 bottles of wine b. Spain gives 50 bottles of olives to Italy in exchange for 150 bottles of wine c. Spain gives 50 bottles of wine to Italy in exchange for 150 bottles of olives. d. Spain gives 250 bottles of olives to Italy in exchange for 750 bottles of wine.

24.

Refer to Table 3-2.

Suppose that both countries fully specialize in the good in which they have a

comparative advantage. Both countries have 1,000 hours of labor to devote to production. What is an

example of a mutually beneficial trade?

a.

Spain gives 50 bottles of olives to Italy in exchange for 50 bottles of wine.

b.

Spain gives 50 bottles of olives to Italy in exchange for 150 bottles of wine.

c.

Spain gives 50 bottles of wine to Italy in exchange for 150 bottles of olives.

d.

Spain gives 250 bottles of olives to Italy in exchange for 750 bottles of wine.

Answer 1

B spain gives 50 bottles of olives to italy in exchange of 150 bottles of wine.

Actually optimial level of trade doesn't exist in sbove 4 options. Also spain has a comparative advantage in wine and italy in olives. In option 3 150 bottles of olives cannot be produced by italy. if it is viceversa then it may be correct. i.e spain gives 150 bottles of wine fro exchange of 50 bottles of olives with italy.