Assume that Finland and Latvia produce only two goods.If Finland has an absolute advantage in the production of these two goods compared to Latvia,Finland can still benefit from trade with Latvia.

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Even though Finland has an absolute advantage in producing both goods, it can still benefit from trade with Latvia through specialization and comparative advantage. For example, Finland may be more efficient in producing one of the goods, but Latvia may have a lower opportunity cost of producing the other good. By trading, both countries can benefit from producing and consuming the goods they have a comparative advantage in.

Assume That Finland and Latvia Produce Only Two Goods