additional bushel of corn (or equivalently, to receive more than one bushel of corn for four barrels of oil), it

would be better off.

CLEAR IT UP

What are the opportunity costs and gains from trade?
The range of trades that will benefit each country is based on the country’s opportunity cost of producing each good.

The United States can produce 100 bushels of corn or 50 barrels of oil. For the United States, the opportunity cost of

producing one barrel of oil is two bushels of corn. If we divide the numbers above by 50, we get the same ratio: one

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19.1 • Absolute and Comparative Advantage 455

barrel of oil is equivalent to two bushels of corn, or (100/50 = 2 and 50/50 = 1). In a trade with Saudi Arabia, if the

United States is going to give up 100 bushels of corn in exports, it must import at least 50 barrels of oil to be just as
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