Suppose that country X can produce 1,000 pounds of flour per hour, or catch 500 pounds of fish per hour. In contrast, country Y can produce 1,800 pounds of flour per hour, or catch 300 pounds of fish per hour. If both countries specialize in their comparative advantage and trade, by how much combined output of fish and flour per hour be greater than if there were no trade and the countries divide an hour of time equally between each output?

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Country X has a comparative advantage in fish (500 fish vs. 1000 flour), and country Y in flour (1800 flour vs. 300 fish). If they specialize, X produces 500 fish, Y produces 1800 flour. Without trade, X produces 500 flour and 250 fish, Y produces 900 flour and 150 fish. Specialization increases output by 400 flour (1800-1400) and 100 fish (500-400).

Suppose That Country X Can Produce 1,000 Pounds of Flour