Elucidate the gains that have occurred before specialization
Elucidate the gains that have occurred using the resources as before specialization?
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Now each country will have more than they had originally: Mexico now has 25 tons of avocados left plus 10 tons of soybeans. U.S. now has 35 tons of avocados and keeps 20 tons of soybeans. Mexico has gained 1 ton of each; U.S. has gained 2 tons of avocados and 1 ton of soybeans, and these gains have occurred using the same resources as before specialization. This example illustrates that specialization and trade can improve overall output even when one country (U.S.) can produce more of both items compared to the other without trade. Specialization and trade have the same effect as an increase in resources or technological progress.
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Mutually beneficial exchange is probable whenever relative production costs vary previous to trade, is a manner to state the law of: (1) Positive profits from trade. (2) Comparative benefit. (3) Specialization and Division. (4) Purchasing power parity
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