Suppose that Croatia and Luxembourg both produce beets and wheat. Croatia's opportunity cost of producing a bushel of wheat is 6 bushels of beets while Luxembourg's opportunity cost of producing a bushel of wheat is 11 bushels of beets.
By comparing the opportunity cost of producing wheat in the two countries, you can tell that has a comparative advantage in the production of wheat and has a comparative advantage in the production of beets.
Suppose that Croatia and Luxembourg consider trading wheat and beets with each other. Croatia can gain from specialization and trade as long as it receives more than of beets for each bushel of wheat it exports to Luxembourg. Similarly, Luxembourg can gain from trade as long as it receives more than of wheat for each bushel of beets it exports to Croatia.
Based on your answer to the last question, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Luxembourg and Croatia to gain from trade? Check all that apply.
A. 5 bushels of beets per bushel of wheat
B. 10 bushels of beets per bushel of wheat
C. 7 bushels of beets per bushel of wheat
D. 17 bushels of beets per bushel of wheat