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Country A can produce either 10 units of wine or 5 units of cheese, while Country B can produce either 6 units of wine or 2 units of cheese. Country A has a comparative advantage in wine production.
Country A produces 10 units of cheese while Country B produces 8 units of cheese, showing that both countries have the same opportunity cost.
Country A shifts production from 5 units of wine to 4 units of cheese, resulting in a loss of 1 unit of wine, while Country B continues to produce only wine.
Country A and Country B both produce 10 units of wine and 10 units of cheese, indicating that they do not specialize in production.
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Absolute and Comparative Advantage
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