Suppose that Hungary and Norway both produce beets and wheat. Hungary's opportunity cost of producing a bushel of wheat is 4 bushels of beets while Norway'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 Hungary and Norway consider trading wheat and beets with each other. Hungary can gain from specialization and trade as long as it receives more than _______ bushels of beets for each bushel of wheat it exports to Norway. Similarly, Norway can gain from trade as long as it receives more than _______ bushels of beets for each bushel of wheat it exports to Hungary. Based on your answer, which of the following prices of trade (that is, price of wheat in terms of beets) would allow both Norway and Hungary to gain? Check all that apply.
1) 1/11 bushel of beets per bushel of wheat
2) 6 bushels of beets per bushel of wheat
3) 16 bushels of beets per bushel of wheat
4) 4 bushels of beets per bushel of wheat
5) 8 bushels of beets per bushel of wheat