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Business, 02.09.2021 22:00 oreo543

Candonia has a comparative advantage in the production of , while Sylvania has a comparative advantage in the production of . Suppose that Candonia and Sylvania specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of sugar and million pounds of potatoes. Suppose that Candonia and Sylvania agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 8 million pounds of potatoes for 8 million pounds of sugar. This ratio of goods is known as the price of trade between Candonia and Sylvania.

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