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Homework answers / question archive / Suppose that France and Switzerland both produce beer and wine
Suppose that France and Switzerland both produce beer and wine. France's opportunity cost of producing a bottle of wine is 5 barrels of beer while Switzerland's opportunity cost of producing a bottle of wine is 10 barrels of beer. Which country has a comparative advantage in the production of wine? Which country has a comparative advantage in the production of beer? What terms of trade would allow both countries to benefit from trading?
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