The table indicates the quantities of rice and wheat that two countries, X and Y, can produce when each country allocates its resources equally between rice and wheat production. Suppose each country now specialises in line with comparative advantage and then trades with the other country. Which terms of trade would make both countries better off?
- A1 wheat = 5 rice
- B1 wheat = 3 rice
- C1 wheat = 2.5 rice
- D1 wheat = 2 rice