EXAMPLE 1: Assume that there are two nations in the world, Egypt and Spain, and that each country can produce only two products. Each country uses half of its resources on each product. They can produce the following: Corn Silk Egypt 6,000 kg 4,500 kg Spain 1,500 kg 7,000 kg 1. If the two nations do not trade, how much Corn and Silk is produced? 2. Read the sentences and underline the correct word in brackets assuming the two nations do not trade: a. Egypt has a(n) (absolute, comparative) advantage in the production of (Corn, Silk) b. Spain has a(n) (absolute, comparative) advantage in the production of (Corn, Silk) 3. The two countries decide to trade. Fill in the following table: Corn Silk Egypt Spain Total 4. Will the countries gain from trading? Explain