If the United States can produce 50 airplanes or 50,000 shirts in one year, while Mexico can produce 5 airplanes or 15,000 shirts in one year, then

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Quizplus · Accepted Answer

The United States has an absolute advantage in producing both airplanes and shirts, but it still has a comparative advantage in producing airplanes because it can produce more airplanes relative to shirts than Mexico. On the other hand, Mexico has a comparative advantage in producing shirts because it can produce more shirts relative to airplanes than the United States. Therefore, if the two countries specialize in producing the goods in which they have a comparative advantage and then trade with each other, both countries can benefit from the trade.

If the United States Can Produce 50 Airplanes or 50,000