ook at the table below and state if either country has an absolute or comparative advantage in either of the two products.

 

Goods Produced by One Unit of Resources

 

Corn

Cotton

Country A

2,000

200

Country B

1,000

800

 

(i) From the table above, do you believe that these two countries should trade with each other? If so, what good should Country A specialize in? What good should Country B specialize in?  

(ii) If there is a basis for trade, rewrite the values in the table showing how much overall production of both goods will increase (thereby showing the benefits of trade)