1. The production possibilities of two countries Mexico) and USA for the same two goods: Food and Wine are as shown in the table below: Food Clothing Mexico 150 450 USA 200 300 A) Draw the production possibilities corves for both countries. Note that we are assuming that the production possibilities curves have constant slopes. [5 pts.] Mexico USA Food Food Clothing Clothing B) How do you detect if there is an opportunity for trade between Mexico and USA? [5 pts.] C) If trade opens between Mexico and USA, what would be the pattern of trade between the two countries? [5 pts.]. By applying the demand and supply analysis in Chapter 3 of our text, determine the exchange rate between the two currencies: US Dollar and Mexican Pesos. State clearly the demand function for Pesos, bearing in mind that demand for Pesos is derived from demand for U.S. citizens for goods (imports) from Mexico. Therefore demand for imports from Mexico is a function of the average prices level in Mexico, average incomes level in the U.S., the preferences for Mexican goods, expectations, the number of citizens buying goods from Mexico and/or desiring to engage in investments in Mexico, etc. By the same token, specify the supply function of Mexican Pesos to U.S. citizens. [5 pts.] Next, Sketch graphically the demand and supply for Pesos and determine the equilibrium price for Pesos in terms of US Dollars ( U.S.$/ Peso). [5 pts.] B. State one thing that can happen, and show graphically, what curve may shift to cause the U.S. Dollar to appreciate in value in terms of Mexican Pesos. [10 pts.]3. The consumer choice equilibrium prevails when MUx/Px = MUy/Py =MUz/Pz. Suppose that you have 9 hours left to cram for final exams, and you want to get as high an average numerical grade as possible in three courses: Marketing, Accounting and Microeconomics. Your grade in each course depends on the time devoted to studying the subjects in the following manner. Marketing Accounting Microeconomics Hrs. of Study Grade Hrs. of Study Grade Hrs. of Study Grade 90 O O 80 O 97 90 40 98 N 97 60 99 98 70 100 99 79 100 un un 100 87 100 100 94 100 7 100 100 By considering the change in average grade as marginal utility (MU), and the change in hours of study as the price, how many hours should you devote to studying each subject? [25 pts.]