Nation X can produce with one unit of resource either 8 units of food or 4 units of cloth.Nation Y can produce with one unit of resource either 3 units of food or 2 units of cloth.If Nation X and Y freely trade goods,and if these are the only two goods they consume,Nation X will produce ________ food and will produce ________ cloth.

Question

Quizplus · Accepted Answer

Nation X has a comparative advantage in producing food (8 units of food per resource unit vs. 3 units for Nation Y), and Nation Y has a comparative advantage in producing cloth (since it only sacrifices 1.5 units of food for each unit of cloth, compared to Nation X's 2 units of food for each unit of cloth). Therefore, Nation X will specialize in producing more food, and less cloth, to trade with Nation Y.

Nation X Can Produce with One Unit of Resource Either