The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization:

Question

Quizplus · Accepted Answer

India has a comparative advantage in producing rice as it can produce 2 bushels of rice with 1 unit of input, while Canada can produce only 1 bushel of rice with the same input. On the other hand, Canada has a comparative advantage in producing wheat as it can produce 2 bushels of wheat with 1 unit of input, while India can produce only 1 bushel of wheat with the same input. Therefore, India should specialize in producing rice and export it to Canada in exchange for Canadian wheat, which Canada specializes in producing. This would result in gains from specialization and trade for both countries.

The Production Possibilities Table Given Below Shows How Many Bushels