illustrates the range of trades that would benefit both sides.

The U.S. economy, after specialization, will

The Saudi Arabian economy, after specialization, will

benefit if it:

benefit if it:

Exports no more than 60 bushels of corn

Imports at least 10 bushels of corn

Imports at least 20 barrels of oil

Exports less than 60 barrels of oil

TABLE 19.5 The Range of Trades That Benefit Both the United States and Saudi Arabia

The underlying reason why trade benefits both sides is rooted in the concept of opportunity cost, as the

following Clear It Up feature explains. If Saudi Arabia wishes to expand domestic production of corn in a world

without international trade, then based on its opportunity costs it must give up four barrels of oil for every one

additional bushel of corn. If Saudi Arabia could find a way to give up less than four barrels of oil for an

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