Economics (AS & A Level) · Oct / Nov 2023 · Paper 13 · Question 24

Country R and country S are going to trade 1 unit of product X for \frac{1}{2} unit of product Y. With a given amount of resources: • country R can produce either 30 units of product X or 50 units of product Y • country S can produce either 20 units of product X or 25 units of product Y. Which statement is correct, according to the theory of comparative advantage?

1. AFree trade will benefit both R and S.
2. BFree trade will benefit neither R nor S.
3. CFree trade will benefit R but not S.
4. DFree trade will benefit S but not R.

As printed in the paper