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

Shoe Production Refrigerator Production

United States 3,500

Mexico

6,000

Total

9,500

26,000

2,500

28,500

TABLE 19.10 Shifting Production Toward Comparative

Advantage Raises Total Output

This numerical example illustrates the remarkable insight of comparative advantage: even when one country

has an absolute advantage in all goods and another country has an absolute disadvantage in all goods, both
countries can still benefit from trade. Even though the United States has an absolute advantage in producing

both refrigerators and shoes, it makes economic sense for it to specialize in the good for which it has a

comparative advantage. The United States will export refrigerators and in return import shoes.

How Opportunity Cost Sets the Boundaries of Trade
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