Suppose that Spain and Denmark both produce rye and wine

Suppose that Spain and Denmark both produce rye and wine. Spain's opportunity cost of producing a bottle of wine is 5 bushels of rye while Denmark's opportunity cost of producing a bottle of wine is 10 bushels of rye.

By comparing the opportunity cost of producing wine in the two countries, you can tell that ? has a comparative advantage int he production of wine and _? has a comparative advantage in the production of rye.

Suppose that Spain and Denmark consider trading wine and rye with each other. Spain can gain from specialization and trade as long as it receives more that ?_ of rye for each bottle of wine it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than _? of wine for each bushel of rye it exports to Spain.

Based on your answer to the last question, which of the following terms of trade ( that is, price of wine in terms of beer) would allow both Denmark and Spain to gain from trade? Check all that apply.

a. 1 bushels of rye per bottle of wine

b. 8 bushels of rye per bottle of wine

c. 9 bushels of rye per bottle of wine

d. 3 bushels of rye per bottle of wine