When a country specializes in the production of a good, this means that it can produce this good at a lower opportunity cost than its trading partner. Because of this comparative advantage, both countries benefit when they specialize and trade with each other. The following graphs show the production possibilities frontiers (PPFS) for Candonia and Lamponia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 12 million pounds of grain and 6 million pounds of sugar, as indicated by the grey stars marked with the letter A. SUGAR (Millions of pounds) 32 28 24 20 16 12 + 4 0 0 PPF 4 == Candonia 8 12 16 20 24 GRAIN (Millions of pounds) 28 32 Candonia has a comparative advantage in the production of production of (? SUGAR (Millions of pounds) 32 28 24 20 16 12 0 0 PPF 4 Lamponia A 8 12 16 20 24 GRAIN (Millions of pounds) 28 32 (?) while Lamponia has a comparative advantage in the Suppose that Candonia and Lamponia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of sugar and million pounds of grain.

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