What is the most important river for trade in commerce between western European countries that flow along the borders of or through Germany, France, Switzerland and the Netherlands
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- The Rhine River is a significant river that flows through all four countries: Switzerland, France, Germany, and the Netherlands. Show more…
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Suppose that France and Germany both produce oil and shoes. France's opportunity cost of producing a pair of shoes is 3 barrels of oil, while Germany's opportunity cost of producing a pair of shoes is 11 barrels of oil. By comparing the opportunity cost of producing shoes in the two countries, you can tell that France has a comparative advantage in the production of shoes and Germany has a comparative advantage in the production of oil. Suppose that France and Germany consider trading shoes and oil with each other. France can gain from specialization and trade as long as it receives more than 1/3 barrel of oil for each pair of shoes it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than 1/11 pair of shoes for each barrel of oil it exports to France. Based on your answer to the last question, which of the following prices of trade (that is, the price of shoes in terms of oil) would allow both Germany and France to gain from trade? Check all that apply: 2 barrels of oil per pair of shoes, 18 barrels of oil per pair of shoes, 7 barrels of oil per pair of shoes, 1 barrel of oil per pair of shoes.
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