Suppose that companies in US can manufacture, using one year of labor , 10 units of machinery and 200 tons of corn. Companies in Mexico, using the same input of labor, can manufacture 6 units of machinery and 180 tons of corns.
a- Which trade theory can best demonstrate the benefits of trade in this example and explain?
b- Explain whether each county can specialize in production of one product or not and determine which product to specialize.
c- Illustrate the amount of total production and consumption (combined both countries) before and after specialization and production, suppose that the total production after specialization will be divided equally between the two countries for consumption.