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Economics, Accounting & Business: Post your doubts here!

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View attachment 42332
may/june 2013 paper 12 question 19 how to get A o_O

Food Clothing
X $2 $4
Y $3 $3

Both countries will trade with country X specializing in food and country Y specializing in clothing (due to cheaper cost of production)
If transport cost = $1 (or £0,33), it will take $3 for country X to export foods to country Y and will take $4 for country Y to export clothing to country X. Both countries' cost of production will be the same and they won't trade because there'll be no benefits in it.
 
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