Question

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.

Answer 1

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.