Suppose two countries, Texia and Urbania, produce food and clothing and currently do not trade. Both countries have linear Production Possibility Curves. If Texia devotes all of its resources to food production, it can produce 1,000 units of food per year. If it devotes all of its resources to clothing production, it can produce 500 units of clothing. Urbania can produce either 500 units of food or 200 units of clothing per year. WHICH COUNTRY HAS THE COMPARATIVE ADVANTAGE IN THE PRODUCTION OF CLOTHING AND WHICH HAS THE COMPARATIVE ADVANTAGE IN THE PRODUCTION OF FOOD

Brian has just finished college. he wants to set up a small business to make and sell fireworks. he registers his company and acquires a license from the government. he finds that most of his competitors are selling fireworks at an extremely low price. he would like to make more money, so he decides to innovate and develop better fireworks. he sells his fireworks at a higher price, and they are a huge hit with the customers. after a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. he even starts exporting fireworks overseas. which type of economy does this scenario describe?