Trade theories suggest that both countries gain from trade. In a 2-country, 2-good model, we assume the 2 states—Futland and Tandam share a common currency (allowing us to ignore exchange rate), they both have the same wages, and they both produce two goods: bicycles and boots. The units of labour requirement are shown below, assuming constant returns to scale.     Production Techniques: Units of labour hour required per unit output   Tandom Futland Bicycles 90 hours 120 hours Boots 30 hours 50 hours iii. Which country has a comparative advantage in the production of each of the two goods?

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