Economics - Comparative Advantage

Tommy B

Soldato
Some help would really be appreciated! This is A2 economics and I'm really struggling.

Country X produces 300 units of tea and 200 units of cotton.
Country Y produces 400 units of tea and 400 units of cotton.

Assuming constant returns to scale, I have to calculate (if each country were to specialize in the production of the commodity for which it has a comparative advantage) what would be the changes in total output of the two commodities?

Obviously, I've realized that X should specialize in tea (2/3 OC) and Y in cotton (for trade to take place) but I'm not sure what to do next. When a country specializes in a good, does it ONLY produce that good and thus produce twice as much?

In which case, X would produce 600 tea and Y 800 cotton.
Therefore, 600-400 = +200 (tea)
800-200 = +600 (cotton)

This can't be right!

Tommy B

Soldato
OP
Sorry to annoy people with these "Homework" threads, but there are quite a few of you here doing Economics at uni. I've got 40 Multiple choice questions to do, and I'm completely stuck but by learning how to do this one question I should be OK.

Carzy

Soldato
Why would country X make 600? It's total output is 500. You got an inconsistency between the end output of X, and the end output of Y.

When a country specializes in a good, does it ONLY produce that good and thus produce twice as much?

Yes it specialises solely in that good, but there's nothing to say it'll automatically produce double.

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Tommy B

Soldato
OP
I'm being a fool. Nothing doubles, right?

So the change in output of tea is -100 and the change in output of cotton is +200

Carzy

Soldato
Indeed, see my edit. I don't know if those numbers are correct though, and I'm just about to go out. I'm sure someone else will let you know.

Tommy B

Soldato
OP
I assumed the figures were real time values for what they were producing, rather than figures showing what they could produce after specialization.

Thank you very much.