Portugal specializes in the production of wine and produces 10 million bottles. The United Kingdom specializes in the production of cheese and produces 100 million pounds. After trading with each other, Portugal consumes 6 million bottles of wine and 60 million pounds of cheese. Therefore, the terms of trade is _____ pounds of cheese per bottle of wine.

Question

Quizplus · Accepted Answer

The terms of trade can be calculated by dividing the amount of cheese consumed by the amount of wine consumed after trade. Portugal consumes 60 million pounds of cheese and 6 million bottles of wine, so the terms of trade is 60 million / 6 million = 10 pounds of cheese per bottle of wine.

Portugal Specializes in the Production of Wine and Produces 10