Assume that there are two countries, A and B, that produce two goods, X and Y, with the following production possibilities:

• Country A can produce 120 units of good X or 80 units of good Y with all of its resources.
• Country B can produce 60 units of good X or 120 units of good Y with all of its resources. Assume that the opportunity cost of producing one unit of good X in terms of good Y is lower for country B than for country A. Calculate the autarky relative price of good X in each country and determine which country has a comparative advantage in the production of good X. If the two countries specialize according to their comparative advantage, what is the world relative price of good X under free trade and the world terms of trade?