Due to differences in technology, China can grow rice at $600/...
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Due to differences in technology, China can grow rice at $600/ ton, while the cost in South Korea would be $400 /ton. Also, China can produce microchips at $500, while it would cost $100 to produce the same microchip in South Korea. In this two-country two-product model, assuming perfect market conditions, perfect labor mobility, and total employment, according to the Comparative Advantage theory, Koreans can maximize their wealth by: buying both rice and microchips from China producing domestically both rice and microchips focusing domestic production on microchips and buying rice from China outsourcing its microchip production to China focusing domestic production on rice and buying microprocessors from China
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