Question: There are two countries, A and B; each can make either Clothes or Food. Country A can make either 5 units of Clothes or 4

There are two countries, A and B; each can make either Clothes or Food.

Country A can make either 5 units of Clothes or 4 units of Food.

Country B can make either 3 units of Clothes or 1 unit of Food.

Both countries consume 1 unit of Clothes for 2 units of Food.

Therefore, both countries will produce goods in this proportion - 1 unit of Clothes for every 2 units of Food produced.

What would the two countries produce jointly?

Recall that they want to consume in the same ratio of 1 Clothes unit per 2 Food units. Consider who has comparative advantage in producing Food. Remember that A can only produce 4 units of Food and B can produce only 1 unit of Food.

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