Sri Lanka

Identify the comparative advantage enjoyed by each country. Using your knowledge of specialization and trade, show that the two countries can benefit by consuming more of both goods after trade.

TRADE Here are some hypothetical numbers used to illustrate the ideas of trade-offs, specialization, and comparative advantage. Assume Sri Lanka, using all her resources efficiently, can produce either 2,500 bags of rice OR 5,000 bags of tea. Let’s also assume that, using all her resources efficiently, Kenya can produce either 2,500 bags of rice OR […]

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