The table shows how much rice and wheat two countries, X and Y, can grow when each country divides its resources equally between growing rice and wheat.
Assume that each country now specialises according to comparative advantage and trades with the other country.
Which terms of trade would benefit both countries?
1 )
1 wheat = 5 rice
2 )
1 wheat = 3 rice
1 wheat = 2.5 rice
4 )
1 wheat = 2 rice
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