How much steel will Country X produce if both countries specialize according to their comparative advantage?

To determine how much steel Country X will produce if both countries specialize according to their comparative advantage, it’s essential to understand the concept of comparative advantage. This economic principle suggests that countries should produce goods in which they have the lowest opportunity cost, allowing for more efficient resource allocation and higher overall production when trading with each other.

If Country X specializes in the production of steel based on its comparative advantage, it will focus all of its resources on that production. Prior analysis of each country’s production capabilities provides insight into their respective advantages. Assuming Country X has a comparative advantage in steel production, it will allocate its resources to maximize output in that sector rather than spreading them thin across multiple industries.

The conclusion that Country X would produce 40 tons indicates that this output aligns with the effective utilization of Country X's resources specifically in steel production. Given that specialization leads to increased productivity, it is logical that Country X, focusing entirely on steel, reaches this maximum output when both countries collaborate and trade. Each will benefit from focusing on their strengths, leading to overall gains.

This understanding of comparative advantage and specialization helps clarify the reason for arriving at 40 tons as the production output for Country X when focusing solely on the steel industry.