In Canada, one labour hour can produce 6 bagels or 24 chairs. In the United States, one labour hour can produce 11 bagels or 20 chairs. Suppose the United States follows its comparative advantage in deciding w produce and trade with Canada at a trade price of 3.7 chairs per bagel. For every 3300 units of the goods th United States produces and trades, what is the gains from trade in terms of the other goods?

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.