Question
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 40 scones per hour or 1 sweater per hour. Suppose
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 40 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 20 scones per hour or 2 sweaters per hour.
workers have an absolute advantage in producing scones, and workers have an absolute advantage in producing sweaters.
workers have a comparative advantage in producing scones, and workers have a comparative advantage in producing sweaters.
If England and Scotland decide to trade, England will trade to Scotland.
If a Scottish worker could produce only 1 sweater per hour, Scotland gain from trade, and England gain from trade.
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