Question

A german worker takes 600 hours to produce a car and 3 hours to produce a case of wine. a french worker takes 800 hours to produce a car and hours to produce a case of wine. for what values of will gains from trade be possible? check all that apply. 1 3 900 950 for what values of will germany export cars and import wine? check all that apply.

Answer 1

The answer is 1 hour or 3.

Step-by-step explanation:

Denote X is the number of hours it takes French worker to produce a case of wine.

=> The opportunity cost for French worker to produce a car is: 800/X case of wine

The opportunity cost for German worker to produce a car is 600/3 = 200 case of wine

For Germany to export cars and import wine, the opportunity cost for German worker to produce a car should be lower than the opportunity cost for French worker to produce a car or:

200 < 800/X <=> X < 800/200 <=> X <4

So, the right answer is 1 hour or 3 hour.

Answer 2

Answer: 1 and 3 are the correct options.

Explanation:

A German worker takes 600 hours to produce a car and 3 hours to produce a case of wine.

Opportunity cost of a car for a German worker = 200 cases of wine

Opportunity cost of a case of wine for a German worker = 1/200 cars

A french worker takes 800 hours to produce a car and X hours to produce a case of wine.

Opportunity cost of a car for a French worker = 800/X cases of wine

Opportunity cost of a case of wine for a French worker = X/800 cars

Gains from trade will be beneficial only when, opportunity cost of a car for German worker is less than that for a French worker

200<800/X

X<4

or when opportunity cost of a case of wine is greater in Germany than in France.

1/200 > X/800

X<4

So, 1 and 3 are the correct options.

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