producing refrigerators. As a result, U.S. production of shoes decreases by 1,500 units (6/4 × 1,000), while its

production of refrigerators increases by 6,000 (that is, 6/1 × 1,000). Mexico also moves production toward its

area of comparative advantage, transferring 10 workers away from refrigerators and toward production of
shoes. As a result, production of refrigerators in Mexico falls by 2,500 (10/4 × 1,000), but production of shoes
increases by 2,000 pairs (10/5 × 1,000). Notice that when both countries shift production toward each of their

comparative advantages (what they are relatively better at), their combined production of both goods rises, as

shown in Table 19.10. The reduction of shoe production by 1,500 pairs in the United States is more than offset

by the gain of 2,000 pairs of shoes in Mexico, while the reduction of 2,500 refrigerators in Mexico is more than

offset by the additional 6,000 refrigerators produced in the United States.

Country
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