Table 3-4

-Refer to Table 3-4.At which of the following prices,if any,could both Denmark and Finland gain from trade?
A) 2/3 pounds of ham per dozen eggs.
B) 1 pound of ham per dozen eggs.
C) 1.4 pounds of ham per dozen eggs.
D) None of the above are correct.

Question

Table 3-4
 
-Refer to Table 3-4.At which of the following prices,if any,could both Denmark and Finland gain from trade?
A) 2/3 pounds of ham per dozen eggs. 
B) 1 pound of ham per dozen eggs. 
C) 1.4 pounds of ham per dozen eggs. 
D) None of the above are correct.

Quizplus · Accepted Answer

At a price of 1.4 pounds of ham per dozen eggs, Denmark's opportunity cost of producing one dozen eggs is 2/3 pounds of ham, while Finland's opportunity cost of producing one dozen eggs is 1 pound of ham. Therefore, Denmark has a comparative advantage in producing eggs, while Finland has a comparative advantage in producing ham. They can both benefit from trade by Denmark specializing in egg production and exporting eggs to Finland in exchange for ham, which Finland specializes in producing.

Table 3-4 -Refer to Table 3-4.At Which of the Following Prices,if Any,could