Suppose Spain is currently producing 90 units of wine and 10 units of cheese,but to produce 10 more units of cheese it must sacrifice 30 units of wine.Further,suppose that Portugal produces 45 units of wine and 45 units of cheese,but to produce 10 more units of cheese it must sacrifice only 10 units of wine.It can be concluded that

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Spain has a comparative advantage in wine production because it only needs to sacrifice 1/3 of a unit of wine to produce 1 unit of cheese, whereas Portugal needs to sacrifice 1 unit of wine to produce 1 unit of cheese. Portugal, on the other hand, has a comparative advantage in cheese production because it has a lower opportunity cost of producing cheese (only sacrificing 1/9 of a unit of wine) compared to Spain (sacrificing 1/3 of a unit of wine). Therefore, both countries can benefit from trade if Spain specializes in producing wine and Portugal specializes in producing cheese.

Suppose Spain Is Currently Producing 90 Units of Wine and 10