Assume that Ghana and South Korea both have the same amount of resources and that these resources can be used to produce either rice or cocoa. Assume further that 200 units of resources are available in each country.

Assume that Ghana is more efficient in the production of both cocoa and rice; that is Ghana has an absolute advantage in the production of both products.

Resources required to produce 1 ton of cocoa and rice

	Cocoa	Rice
Ghana	10	13.33
South Korea	40	20

Production and consumption without trade

	Cocoa	Rice
Ghana	10	7.5
South Korea	2.5	5
Total Production	12.5	12.5

Production with specialization

	Cocoa	Rice
Ghana	15	3.75
South Korea	0	10
Total Production	15	13.75

Potential Solution: Consumption after Ghana trades 4 tons of cocoa for 4 tons of South Korean rice

	Cocoa	Rice
Ghana	11	7.75
South Korea	4	6

Increase in consumption as a result of specialization and trade

	Cocoa	Rice
Ghana	1	0.25
South Korea	1.5	1

Try to find a more optimal trade solution for Ghana and South Korea.

Hint: look at total production without trade (12.5)