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Given the Following Ricardo-Type Table Showing the Amount of Labor

Question 13

Multiple Choice

Given the following Ricardo-type table showing the amount of labor input required to produce one unit of output of each of the two goods in each of the two countries:
 Shirts  Machines  France 3 days 5 days  Germany 2 days 4 days \begin{array}{lll}&\underline{\text { Shirts }}&\underline{\text { Machines }}\\\text { France } & 3 \text { days } & 5 \text { days } \\\text { Germany } & 2 \text { days } & 4 \text { days }\end{array}

If the wage rate in France is €60 per day (i.e., 60 euros per day) , what is the upper limit to the wage rate per day in Germany (which also uses the euro) that is compatible with two-way trade between the countries?


A) €40
B) €48
C) €75
D) €90

Correct Answer:

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