d) Show that both Home and Foreign gain from trade. Specializing in producing only one production then trade with other country is a more efficient method than direct production. In the absence of trade, Home could gain 3 bananas by foregoing 2 apples. Foreign could gain by 1 foregoing 5 bananas. Therefore, trade allows each country to trade 2 bananas for 1 apple. Home could then gain 4 bananas by foregoing 2 apples. Foreign could gain 1 apple by just foregoing 2 bananas. Both Home and Foreign gained from trade. Pa ala 3 QB 600 Home relative price(* comparative adv in producing apple) = Home OCA = Pb alb 2' QA 400