consider the standard
two-country, two-commodity model. Let the two countries be “Less Developed
World” and “Rest of World” and the two commodities be agricultural
goods and manufactured goods. Figure 12.1 portrays the theoretical benefits
of free trade with Less Developed World’s domestic (no-trade) production
possibility frontier shown in Figure 12.1a and Rest of World’s frontier in
Figure 12.1b. Point A on the Less Developed World production possibility
frontier PP in Figure 12.1a provides the illustration. With full employment