The levels of consumption before trade

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Reference no: EM131202004

Suppose that without trade, France is producing 50 units of cheese and 25 units of oilves, while Spain is producing 150 units of cheese and 100 units of olives. Now assume France specializes according to its comparative advantage and produces the maximum amount of that product and is willing to trade with Spain. ASSUME BOTH COUNTRIES WOULD LIKE TO CONTINUE TO CONSUME AT OR ABOVE THE LEVELS OF CONSUMPTION BEFORE TRADE. Spain can then produce less of the product that France is producing and instead shift some resources toward the product it has a comparative advantage in. If Spain does, how many extra units (IN TOTAL BETWEEN THE 2 COUNTRES) of its comparative advantage product will be produced?

Reference no: EM131202004

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