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2 June, 18:03

Maldonia has a comparative advantage in the production of sugar, while desonia has a comparative advantage in the production of potatoes. suppose that maldonia and desonia specialize in the production of the goods in which each has a comparative advantage. after specialization, the two countries can produce a total of million pounds of sugar and million pounds of potatoes.

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  1. 2 June, 18:07
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    Maldonia must give up 8 units of TEA to get 16 units of lemons, while Desonia must give up 8 units of tea to get 4 get units of lemons. Hence the opportunity cost of productivity are units of lemon for Maldonia - 0.5y (-8/16), and for Desonia it is - 2y (-8/4). This means Maldonia has comparative advantage in producing lemon and Desonia has comparative advantage in tea.
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