Suppose country X can produce a personal computer at an opportunity cost of 1000 t-shirts. Assume that country X has a comparative advantage in the production of t-shirts
Would country X ever agree to terms of trade with country Y such that one personal computer would be exchanged for 1100 t-shirts?
There would be no reason for country X to agree to such terms of trade. If country X can already produce one personal computer at an opportunity cost of 1000 t-shirts why would it agree with country Y to purchase a computer for 10% higher? The answer is it would not.
Economics