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Country X and country Y both produce liters of wine and meters of cloth. In country X each worker in an hour can produce
Country X and country Y both produce liters of wine and meters of cloth. In country X each worker in an hour can produce either 10 liters of wine or 50 meters of cloth. In country Y each worker in an hour can produce either 6 liters of wine of 24 meters of cloth. Each country has constant opportunity cost of production and each has 100 hours of labor available. Initially the two countries do not trade. . Country X allocates 25 hours of labor to wine production and 75 hours of labor to cloth production. Country Y allocates 50 hours of labor to wine production and 50 hours of labor to cloth production. The two countries decide to completely specialize and then engage in trade. With specialization country X will produce liters of wine and meters of cloth. Country Y will produce liters of wine and meters of cloth. The two countries decide to trade 276 liters of wine in exchange for 1.242 meters of cloth.
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