Two countries, Northland and Southland, produce two goods, food and drink. The table shows how many hours each has to use to produce one unit of each product. After specialising according to comparative advantage, they decide to trade.
Which exchange rate will allow both countries to benefit from trade?
1 )
1 unit of food to $\frac{1}{2}$ unit of drink
2 )
1 unit of food to 1 unit of drink
1 unit of food to 2 units of drink
4 )
1 unit of food to 3 units of drink
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