This table shows how much wine and cheese can each be produced in Spain and Portugal with one unit of equivalent resources.Initially there is no trade.Once trade opens up,transportation costs are assumed to be zero. TABLE 32-5 Refer to Table 32-5.Once Spain and Portugal begin to trade cheese and wine,

Question

This table shows how much wine and cheese can each be produced in Spain and Portugal with one unit of equivalent resources.Initially there is no trade.Once trade opens up,transportation costs are assumed to be zero.  TABLE 32-5 Refer to Table 32-5.Once Spain and Portugal begin to trade cheese and wine,

Quizplus · Accepted Answer

With trade, both Spain and Portugal can consume wine and cheese at a lower opportunity cost than before. For example, Portugal can produce 2 units of cheese instead of 1 unit, and Spain can produce 3 units of wine instead of 2 units. They can then trade the excess with each other, resulting in both countries being able to consume more of both goods than before, with a lower opportunity cost. Therefore, the opportunity cost of the goods they now import will be less than when there was no trade, for both countries. None of the other options are correct.

This Table Shows How Much Wine and Cheese Can Each