Suppose households in the East and West of a region can produce Textiles and Food as shown in the table below. Initially, each household splits two hours of production time evenly between producing textiles and food. Complete the first part of the table.

	East		West
	Textiles	Food	Textiles	Food
Output per hour	1	4	1	2
Comparative advantage?

Now suppose that each specializes, devoting two hours to the production of the good for which it has a comparative advantage, and the exchange rate is 1 textile for 3 food. Complete the next part of the table. (Transportation is instantaneous and trading costs are zero.)

	East			West
	Textiles	Food	Textiles		Food
Change in production from specialization
Exchange
Gains from trade

Finally, suppose that transportation for trade now becomes positive and takes hour. Complete the last part of the table.

	East	West
Transportation cost (in terms of textiles or food)
Will they trade?