Suppose that Portugal and Austria both produce beer and cheese. Portugal's opportunity cost of producing a pound of cheese is 3 barrels of beer while Austria's opportunity cost of producing a pound of cheese is 11 barrels of beer. By comparing the opportunity cost of producing cheese in the two countries, you can tell thathas a comparative advantage in the production of cheese and has a comparative advantage in the production of beer.
Suppose that Portugal and Austria consider trading cheese and beer with each other. Portugal can gain from specialization and trade as long as it receives more thanof beer for each pound of cheese it exports to Austria. Similarly, Austria can gain from trade as long as it receives more than of cheese for each barrel of beer it exports to Portugal.
Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of beer) would allow both Austria and Portugal to gain from trade?
A. 4 barrels of beer per pound of cheese
B. 6 barrels of beer per pound of cheese
C. 13 barrels of beer per pound of cheese
D. 2 barrels of beer per pound of cheese