ou only need to explain with words how trade makes each person better off. Include graphs/tables/calculations in the explanation. Present answers with 4 decimals if needed. Note that Shoes & Gloves is in the x-axis, and Andy & Jack is in the y-axis. Production/hr Shoes Gloves Andy 96 62 Jack 74 38

Suppose countries A and B produce and consume (assuming convex preferences) apples and bananas using only labour. Unit labour cost for apples in country A are 2 and 1 in country B. Unit labour cost for bananas are 5 in country A and 4 in country B. The labour force is the same in both countries, and given by 100 in each country. Which three of the following statements are true?       Each country has an absolute advantage.     Allowing for international trade, the production of 100 apples and 20 bananas can occur in a global market equilibrium, but not in a market equilibria under autarky.     Country A will produce apples, with or without international trade.     Under autarky, the relative price for apples (price for apples/price for bananas) equals 0.4 in country A and 0.25 in country B.     Country B has an absolute advantage in producing bananas.     Allowing for international trade, the production of 60 apples and 40 bananas is feasible, but…

When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Maldonia and Desonia. Both countries produce grain and sugar, each initially (i.e., before specialization and trade) producing 18 million pounds of grain and 9 million pounds of sugar, as indicated by the grey stars marked with the letter A.           Maldonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR)   , while Desonia has a comparative advantage in the production of (GRAIN, SUGAR, NEITHER GRAIN OR SUGAR, BOTH GRAIN AND SUGAR)    . Suppose that Maldonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two…

Opportunity Cost and the Gains from Specializ PPF Review Problems What is the opportunity cost of an extra calculator for Smith? What is the opportunity cost of an extra calculator for Jones? Who has the absolute advantage in computer production? Who has the absolute advantage in calculator production? Who has the comparative advantage in calculator production? Who has the comparative advantage in computer production? Jones 6 120