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At the end of this video, you’ll have a better understanding of why it makes sense for countries to engage in trade.
The United States is better off by one computer and better off by one shirt. Trade according to Comparative Advantage has made both countries better off.
One thing to keep in mind here is that Absolute Advantage, although it doesn't explain trade, it does explain how wealthy countries are.
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So even with trade, notice that Mexico is still considerably less wealthy than the United States, that is, total production of Mexico is one computer and nine shirts compared to the United States with 13 computers and 13 shirts.
So Absolute Advantage does explain which countries in the world are rich or one of the aspects of which countries in the world are rich.
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