Question

Suppose that one US dollar buys 1.50 Swiss francs. A chocolate bar costs 0.75 francs in Switzerland. How much will the chocolate bar cost in US dollars?

Compared to country Y country X has a comparative advantage I’m producing computers. Country Y has a comparative advantage over country x in producing automobiles. How can the two countries best take advantage of this situation?

Answer 1

Answer: 1) 50 cents 2) they can trade with each other

Explanation of question 1

Ratio of dollars to francs

1: 1.5

The chocolate costs 0.75 francs. Divide 1.5 by 0.75 to find the multiplier in the ratio which is 2. Divide $1 by 2 to get 50 cents