Consider two neighboring island countries called Bellissima and Euphoria. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor.

Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Euphoria uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Bellissima produces 8 million pairs of jeans and 48 million bushels of corn, and Euphoria produces 15 million pairs of jeans and 20 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn it produces.

This is the table

Country

Jeans(pairs per hour of labor) Corn(bushels per hour of labor)

Bellissima 8 16

Euphoria 5 20

Bellissima's opportunity cost of producing 1 pair of jeans is of corn, and Euphoria's opportunity cost of producing 1 pair of jeans is

of corn. Therefore, Bellissima has a comparative advantage in the production of jeans, and Euphoria has a comparative advantage in the production of corn.

Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producingonlythat good. In this case, the country that produces jeans will produce millionpairs per month, and the country that produces corn will produce millionbushels per month.