The nation of Loneland does not allow international trade. In Loneland, you can buy 1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export cheese.

Question

Quizplus · Accepted Answer

Given the exchange rates, Loneland has a comparative advantage in producing cheese since it requires less cheese to get the same amount of beef compared to neighboring countries, indicating it would export cheese if trade were allowed.

The Nation of Loneland Does Not Allow International Trade