Suppose that both countries are presently producing combination C.

h) Fill in the blanks in Table 10.23.

Now suppose that each country specializes in the product in which it has a comparative advantage. i) Show the results in Table 10.24.

j) What is the joint gain from trade?
Wheat: Wine:
Suppose that the two countries establish the terms of trade at 1 wine = 1.5 wheat, and Prosperity decides to export 12 wine to Richland.
k) In Table 10.25, show how the two countries will share the gains from trade.