FIGURE 2-5 Comparative Advantage and Gains from Trade
imageBy specializing and trading, the United States and Brazil can produce and consume more of both large jets and small jets. The United States specializes in manufacturing large jets, its comparative advantage, and Brazil—which has an absolute disadvantage in both goods but a comparative advantage in small jets—specializes in manufacturing small jets. With trade, both countries can consume more of both goods than either could without trade.