Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good.
$$\begin{array} { | c | c | c | }
\hline & \text { Spain } & \text { France } \
\hline \text { Grapes } & 3 & 9 \
\hline \text { Textiles } & 1 & 2 \
\hline
\end{array}$$
-Refer to the table above.France will gain from trade so long as the international price of grapes measured in terms of textiles is below

Question

Answer the question(s)below based on the information in the following table,where the numbers represent the number of labor hours it will take to produce a unit of the given good.
 $$\begin{array} { | c | c | c | } 
\hline & \text { Spain } & \text { France } \
\hline \text { Grapes } & 3 & 9 \
\hline \text { Textiles } & 1 & 2 \
\hline
\end{array}$$
-Refer to the table above.France will gain from trade so long as the international price of grapes measured in terms of textiles is below

Quizplus · Accepted Answer

France has a higher labor hours requirement for producing grapes compared to Spain, but it has a lower labor hours requirement for producing textiles. This means that France has a comparative advantage in textiles while Spain has a comparative advantage in grapes. To determine if France will gain from trade, we need to compare the opportunity cost of producing grapes and textiles in France versus the opportunity cost of producing these goods in Spain.

The opportunity cost of producing one unit of grapes in France is 9/2 = 4.5 units of textiles (since it takes 9 labor hours to produce one unit of grapes and 2 labor hours to produce one unit of textiles). The opportunity cost of producing one unit of grapes in Spain is 3 units of textiles.

This means that if the international price of grapes measured in terms of textiles is below 4.5 - 3 = 1.5 units of textiles, France will gain from trade by importing grapes from Spain in exchange for textiles. Solving for the equation yields 1.5 = 3p, where p is the international price of grapes in terms of textiles. The solution is p = 0.5, which means that France will gain from trade as long as the international price of grapes measured in terms of textiles is below 0.5 units of textiles or 1/2 unit of textiles, which is equivalent to 3 units of grapes (since 1 unit of grapes equals 2 units of textiles for Spain). Therefore, the answer is B.

Answer the Question(s)below Based on the Information in the Following