of wine, i.e. a combined total production of 2 units of cloth and 2 units of wine. Here, if The UK commits all of its labor (80+100) for the production of cloth for which The UK has the absolute advantage, The UK produces (80+100)÷80=2.25 units of cloth. On the other hand, if Portugal commits all of its labor (90+120) for the production of wine, Portugal produces (90+120)÷90=2.33... units of wine. The combined total production in this case is 2.25 units of cloth and 2.33 units of wine which is greater than the total production of each good had there been no specialization. Assuming free trade this will lead to cheaper prices for both goods for both countries. Example 2 You and your friends decided to help with fundraising for a local charity group by printing T-shirts and making birdhouses. Scenario 1: One of your friends, Gina, can print 5 T-shirts or build 3 birdhouses an hour. Your other friend, Mike, can print 3 T-shirts an hour or build 2 birdhouses an hour. Because your friend Gina is more productive at printing T-shirts and building birdhouses compared to Mike, she has an absolute advantage in both printing T-shirts and building birdhouses. Scenario 2: Suppose Gina wasn't as agile with the hammer and could only make 1 birdhouse an hour, but she took a screen printing class and could print 10 T-shirts an hour. Mike on the other hand takes woodworking and so he can build 5 birdhouses an hour, but he doesn't know the first thing about making T-shirts so he can only print 2 T-shirts an hour. While Gina would have the absolute advantage in printing shirts, Mike would have an absolute advantage in building birdhouses. Further reading See also Comparative advantage Economies of scale Gains from trade Global labor arbitrage Heckscher–Ohlin model Intra-industry trade New trade theory On the Principles of Political Economy and Taxation, by David Ricardo Real wages Relative price Revealed comparative advantage Ricardian model Supply and demand Trade References External links Absolute Advantage, University of Washington International trade theory