Worksheet - Comparative Advantage EXAMPLE : Assume that there are two nations in the world, Italy and India, and that they can produce only two products. Each country uses half of its resources on each product. They can produce the following: 1. Which country has an absolute advantage in both products, what does this mean? 2. If the two countries do not trade, how many pairs of shoes and computers will be produced? 3. Calculate the opportunity cost of producing a pair of shoes for both countries? 4. Calculate the opportunity cost of producing computers for both countries? 5. If the two countries trade who will export shoes? Computers? 6. What is the trade price for shoes and computers? Does the world gain if the two countries trade