Summary of product condition in countries i and ii
Amount of labour days, cocoa(tons) Cloth(tons)
Country i 200 600 900
country ii 200 300 800
From the above table, we can correctly say in respect of international trade that
- Country I has absolute disadvantage in the production of both cocoa cloth
-
Country I has absolute advantage in the production of both cocoa and cloth
- Country II has absolute advantage in the production of both cocoa and cloth
- Country II has comparative advantage in the production of cocoa
- Country II should leave the production of both cocoa and cloth to country I