When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.The following graphs show the production possibilities frontiers (PPFs) for Candonia and Desonia. Both countries produce grain and tea, each initially (i.e., before specialization and trade) producing 24 million pounds of grain and 12 million pounds of tea, as indicated by the grey stars marked with the letter A.

Candonia Desonia 64 64 56 56 48 48 PPF 40 40 32 TEA (Millions of pounds) 32 TEA (Millions of pounds) 24 PPF 24 16 16 A A 8 CO 0 0 8 16 24 32 40 48 56 64 0 8 16 24 32 40 48 56 64 GRAIN (Millions of pounds) GRAIN (Millions of pounds)Candonia has a comparative advantage in the production of v , while Desonia has a comparative advantage in the production of "V . Suppose that C -cia|ize in the production of the goods in which each has a comparative advantage. After specialization, the two countri graln f:' million pounds of grain and C, million pounds of tea. tea neither rain nor tea 9 es on producing only the good in which it has a comparative Suppose that Candonia and Desonia agree to trade. Each co advantage. The countries decide to exchange 16 million pou both grain and tea an pounds of tea. This ratio of goods is known as the price of trade between Candonia and Desonia. The following graph shows the same PPF for Candonia as before, as well as its initial consumption at point A. Place a black point ( plus symbol) on the graph to indicate Candonia's consumption after trade. Candonia 64 56 Consumption After Trade 48 40 TEA (Millions of pounds) 32 24 PPF 16 A 0 0 8 16 24 32 40 48 56 64 GRAIN (Millions of pounds)\fTrue or False: Without engaging in international trade, Candonia and Desonia would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) O True O False