1 PPF (20 points) Suppose that Econistan produces two goods, marshmallows and toothpicks, under conditions of constant opportunity costs. Given its resources, the maximum number of marshmallows that it can make is 1000 pounds, and the opportunity cost of making one additional box of toothpicks is 4 pounds of marshmallows. a) (5 points) What is the maximum amount of toothpicks that Econistan can produce? b) (10 points) Draw a graph of the PPF using the information above. On your graph, place toothpicks on the vertical axis and marshmallows on the horizontal axis. Be sure to label the axes, the numerical intercepts and the PPF. c) (5 points) What is the value of the slope? What does this value represent? 2 Autarky Equilibrium vs. Trade (80 points [10 per part]) Draw a PPF for The Federated States of Econesia (FSE) which can produce 1,000 diamonds if it devotes all resources to diamond production or 4,000 automobiles if it devotes all resources to automobile production. There is an increasing opportunity cost of producing each good. a) Draw a point \"A\" on your graph indicating the production of 500 diamonds and 2,000 automobilies. b) Draw a point \"B\" on the graph that would be an autarky equilibrium point. Be sure to add all information to help someone else realize that this is an autarky equilibrium point. c) Draw a point \"C\" on the graph that lies along the same 010 as point A. Label this CICO. (:1) Now the FSE opens to international trade. Start a new graph for part d) to avoid some clutter; be sure to label point B on your graph. Assume that FSE has a comparative advantage in producing diamonds. Label a point \"D\" on your graph showing where the country would produce. Show exports and imports on your graph along with a new CIC' curve for utility after trade. e) How would you determine the real price of autos if trade is allowed given your graph above? f) If 300 diamonds are exported and 2500 autos are imported and the price of an auto is $1,000, then what is the price of a diamond