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?
Free trade will benefit both R and S.
2 )
Free trade will benefit neither R nor S.
3 )
Free trade will benefit R but not S.
4 )
Free trade will benefit S but not R.
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