• anonymous
Country A has an absolute advantage over Country B in the production of both soybeans and corn. Explain a scenario in which both countries would benefit if Country A specialized in soybeans and Country B specialized in corn. (both questions have this chart)
Economics - Financial Markets
  • Stacey Warren - Expert
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  • schrodinger
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  • anonymous
  • hunterj68
An absolute advantage means company A can produce more than Company B if it decides to specialize in either. Assume A can produce 30 pounds of soybeans or 20 pounds of corn, and B can produce say 10 pounds of soybean and 15 pounds of corn. A would specialize in Soybeans because it can produce the most, and B would produce Corn because it can produce more corn than Soybeans, now because of their specialization they're more than likely going to want to/need to trade the corn for soybeans or vice versa, and the it becomes beneficial for each other when the opportunity cost in pounds of corn to produce one pound of soybeans falls below the amount of corn Company A could trade it for, and becomes beneficial for B when B can trade less corn for more soybeans beating out his opportunity cost as well.

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