A German worker takes 600 hours to produce a car and 3 hours to produce a case of wine. A French worker takes X hours to produce a car and 4 hours to produce a case of wine.
For what values of X will gains from trade be possible?
For what values of X will Germany export cars and import wine?
Opportunity cost of producing car for wine:
For German worker: 600/3 = 200 wine/car
For French worker: X/4 wine/car
For trade to be possible, countries should specialize in goods.
Hence for Germany to export cars:
200 < X/4 => X > 800
Correct Ans - C,D
Q.2.
For X = 950, Germany will export cars and import Wine.
A German worker takes 600 hours to produce a car and 3 hours to produce a case of wine. A French worker takes X hou...
A German worker takes 400 hours to produce a car and 2 hours to produce a case of wine. A French hours to produce a case of wine. For what values of X will gains from trade be possible?For what values of X will Germany export cars and import wine?
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