Answer the question on the basis of the following information.Assume that by devoting all its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all its resources to Y,Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.
Refer to the given information.Beta would prefer terms of trade at,or close to,1X = 1½Y.

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Nation Beta has a comparative advantage in producing X as it can produce 60X compared to Alpha's 40X. Therefore, to get a better deal in the terms of trade, Beta would prefer to trade X for more units of Y. Given that Beta can produce 40Y compared to Alpha's 60Y, Beta would prefer a trade of 1X for 1½Y. This implies that Beta values Y more than X and hence would prefer terms of trade that are closer to 1X = 1½Y.

Answer the Question on the Basis of the Following Information