Assume that Japan and Mexico have an equal distribution of resources. Suppose that by devoting all of its resources to the production of rice (R), Japan can produce 40 units. By devoting all of its resources to corn (C), it can produce 20 units. Comparable figures for Mexico are 15 units of rice (R) and 15 units of corn (C).

a)Whichnation has the absolute advantage in rice? In corn?

b)Whichnation has thecomparativeadvantage in rice? In corn?

c) Explain why each nation will specialize in which product.

d) Describe acceptable terms of trade for each country.