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Suppose that Hungary and Liechtenstein both produce ale and wheat. Hungary's opportunity cost of producing a bushel of wheat is 5 kegs of ale while
Suppose that Hungary and Liechtenstein both produce ale and wheat. Hungary's opportunity cost of producing a bushel of wheat is 5 kegs of ale while Liechtenstein's opportunity cost of producing a bushel of wheat is 9 kegs of ale. By comparing the opportunity cost of producing wheat in the two countries, you can tell that has a comparative advantage in the production of wheat and has a comparative advantage in the production of ale. Suppose that Hungary and Liechtenstein consider trading wheat and ale with each other. Hungary can gain from specialization and trade as long as it receives more than of ale for each bushel of wheat it exports to Liechtenstein. Similarly, Liechtenstein can gain from trade as long as it receives more than of wheat for each keg of ale it exports to Hungary
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