00:02
Hello, let's fill these blanks.
00:06
So let's start with the first one, comparing the opportunity cost of producing a wine in two countries.
00:15
We can tell that which country has a comparative advantage in the production of wine.
00:21
So we know that if the country has a lower opportunity cost comparing with the other one, this country will have comparative advantage in production of wine.
00:33
And as we can see, spain has lower opportunity cost of producing one bottle of wine.
00:41
So our first answer is spain.
00:46
And this means the other country, denmark, has lower opportunity cost of producing rye.
00:55
It's 1 over 10, comparing with 1 over 5 for spain.
00:58
So denmark is the answer for the second question.
01:05
Denmark has a comparative advantage in the production of rye.
01:11
Okay, the next spain can gain from trade as long as it receives more than, actually more than five bushels of rye.
01:28
Because the opportunity cost of spain is five so they can produce five bushels of rye itself spain can do it itself without any trade if they can get more than five it will be reasonable it will be profitable for spain to five bushels of rye what about denmark denmark can gain from the trade as long as it receives more than how many bottles of wine per one bushel? opportunity cost of producing one bushel is 1 over 10.
02:09
So if it receives more than 1 tenth bottles of wine for each bushel then it will be reasonable, it will be beneficial for denmark...