Assume that India has a comparative advantage in producing a computer game.The United States has an absolute advantage in producing the same game.Mutually advantageous trade will have India producing and exporting the game while the United States will specialize in producing something else.

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Even though the United States has an absolute advantage in producing the computer game, if India has a comparative advantage in producing the game, then both countries can benefit from trade. India can produce and export more of the game to the United States, while the United States can specialize in producing something else where they have an absolute advantage. This will lead to both countries being better off through trade.

Assume That India Has a Comparative Advantage in Producing a Computer