Use the table below to answer the question below; The international production set for Nigeria and Austria is; From the table, it can be deduced that_______

Answer Details

From the table, it can be deduced that Nigeria should produce cocoa and Austria should produce lace. This is because Nigeria has a comparative advantage in producing cocoa since its opportunity cost of producing cocoa is lower than that of Austria, while Austria has a comparative advantage in producing lace since its opportunity cost of producing lace is lower than that of Nigeria. Therefore, each country should specialize in producing the good in which it has a comparative advantage and then trade with each other to maximize their total output and welfare.