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Suppose that the opportunity-cost ratio for watches and cheese is 1C ? 1W in Switzerland but 1C ? 4W in Japan. At which of the following international exchange ratios (terms of trade) will Switzerland and Japan be willing to specialize and engage in trade with each other?
Instructions: You may select more than one answer.
A) 1C = 3W.
B) 1C = ?W.
C) 1C = 5W.
D) ?C = 1W.
E) 2C = 1W.
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