David Ricardo, the British political economist, used the example of two commodities—wine and cloth—produced by England and Portugal to explain trade. The following table shows the number of labor hours it would take England and Portugal to produce one unit each of wine and cloth:

Portugal can produce both wine and cloth using fewer labor hours than England. A group of Mercantilists, who believe that nations build their wealth by exporting more than they import, suggest that Portugal has nothing to gain from trading with England. Would you agree?
Explain your answer.

Transcribed Image Text:

Portugal England Wine 80 120 Cloth 90 100