From the table given, it can be deduced that Bellissima has comparative advantage in rye while Euphoria had comparative advantage in jeans.
<h3>What is comparative advantage?</h3>
It should be noted that comparative advantage simply means the ability of an economy to produce a good at a lower opportunity cost.
In this case, Euphoria's opportunity cost of rye will be:
= 16/4 = 4 jeans.
Bellisima's opportunity cost of rye will be:
= 12/6 = 2 jeans
Therefore, Bellissima has comparative advantage in rye while Euphoria had comparative advantage in jeans.
When there's complete specialization, Bellisima will produce:
= 6 × 4 = 24 million ryes
Euphoria will produce:
= 16 × 4 = 64 million jeans
After trade, the increase in production of rye will be:
= 24 - 18 = 6 million.
The increase in production of jeans will be:
= 64 - 52
= 12 million
Learn more about comparative advantage on:
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