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Ryanteck Ryanteck
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6 years ago
Suppose that the United States and Italy both produce wine and shoes. In the United States, wine sells for $10 a bottle and shoes sell for $40 a pair. In Italy, wine sells for 15 euros a bottle and shoes sell for 20 euros a pair. Given this information, trade will flow in both directions if the price of a dollar is between
A) .5 and .75 euro.
B) 1.5 and 2.5 euros.
C) .67 and 2 euros.
D) 2.0 and 3.0 euros.
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goldlilysgoldlilys
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6 years ago
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#2
4 years ago
thank you. very good info
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#3
4 years ago
I thought answer should be A.), because if it's between .67 and 2, then for example, 1 USD=1.8 EUR, wine for US: 10*1.8=18 EUR, which is higher than 15 EURs in Italy.  and Wine: 80 *1.8 = 144 EUR in US, and it's higher than 40 EUR in Italy. everything flows from Italy to US.
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