In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. If Sue and Tessa specialize in producing the goods in which each of them has a comparative advantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade?

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.