5. The price of trade Suppose that Italy and Germany both produce oil and cheese. Italy's opportunity cost of producing a pound of cheese is 4 barrels of oil while Germany's opportunity cost of producing a pound of cheese is 10 barrels of oil. By comparing the opportunity cost of producing cheese in the two countries, you can tell thatItaly has a comparative advantage in the production of cheese andGermany has a comparative advantage in the production of oil. Suppose that Italy and Germany consider trading cheese and oil with each other. Italy can gain from specialization and trade as long as it receives more than4 barrels of oil for each pound of cheese it exports to Germany. Similarly, Germany can gain from trade as long as it receives more than1/10 pound of cheese for each barrel of oil it exports to Italy. Based on your answer to the last question, which of the following prices of trade (that is, price of cheese in terms of oil) would allow both Germany and Italy to gain from trade? Check all that apply.

9 barrels of oil per pound of cheese
7 barrels of oil per pound of cheese
16 barrels of oil per pound of cheese
1 barrel of oil per pound of cheese