The table indicates the quantities of rice and wheat that two countries, X and Y, are able to produce when each nation allocates its resources evenly between rice and wheat production. Suppose each country then specialises in line with comparative advantage and exchanges goods with the other country. Which terms of trade would be advantageous to both countries?
- A1 wheat = 5 rice
- B1 wheat = 3 rice
- C1 wheat = 2.5 rice
- D1 wheat = 2 rice