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. 1.5 and 2.5 euros.
B. .5 and .75 euro.
C. .67 and 2 euros.
D. 2.0 and 3.0 euros.
Answer: C
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