The production possibilities of two countries, Homeland and Foreign, capable of producing two goods, cloth and wheat, are given as follows: | Country | Output per labor year: Cloth | Output per labor year: Wheat | Homeland | 250 | 200 | Foreign | 300 | 400 | Then each country can benefit if (A) Homeland specializes in the production and export of cloth, while importing wheat from the Foreign country (B) Foreign country specializes in the production and export of cloth, while importing wheat from the Homeland country (C) Homeland and Foreign country both specialize in wheat production in order to maximize world production of wheat (D) There is no scope for specialization and trade

JNU SIS 2016 Question 35: Theories of international trade

The production possibilities of two countries, Homeland and Foreign, capable of producing two goods, cloth and wheat, are given as follows :

Country	Output per labor year: Cloth	Output per labor year: Wheat
Homeland	250	200
Foreign	300	400

Then each country can benefit if

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Theories of international trade has come up 151 times in 6 exams since 2006.

This question is on Absolute and comparative advantage, part of Theories of international trade in International Economics.

Why countries trade: producing more cheaply in absolute terms, or at lower opportunity cost.

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