This is based on the concept of *comparative advantage, which states that a country should produce the good that it can produce at a lower opportunity cost than another country.

The opportunity cost of producing one unit of a good is the amount of the other good that must be given up.

To find the opportunity cost of producing one unit of cocoa for Nigeria, we divide the amount of lace it can produce by the amount of cocoa it can produce: 10/20 = 0.5.

This means that Nigeria has to give up 0.5 metres of lace to produce one tonne of cocoa.

Similarly, the opportunity cost of producing one unit of lace for Nigeria is 20/10 = 2. This means that Nigeria has to give up 2 tonnes of cocoa to produce one metre of lace.

We can do the same calculation for Austria: the opportunity cost of producing one unit of cocoa is 8/12 = 0.67, and the opportunity cost of producing one unit of lace is 12/8 = 1.5.

Comparing the opportunity costs, we can see that Nigeria has a lower opportunity cost of producing cocoa than Austria (0.5 < 0.67), and Austria has a lower opportunity cost of producing lace than Nigeria (1.5 < 2).

Therefore, Nigeria has a comparative advantage in producing cocoa, and Austria has a comparative advantage in producing lace.

By specializing in their respective comparative advantages, both countries can increase their total output and benefit from trade.