1.Suppose that in a year, a worker in China can produce 100 books or 20 televisions, while a worker in India can produce 100 books or 10 televisions.

a.What is the opportunity cost of producing an additional book in each country? (2 marks)

b.If the two countries trade with each other, which country should export which good and why? For trade to occur between China and India, what must be the international price of books? (3 marks)

c.Suppose that China and India each have 100 workers. If each country decides to devote half of its workers to each industry, how many books and televisions does each country produce? What is the world output of books and televisions? (2.5 marks)

d.Now, suppose that each country specializes by devoting all of its workers to the industry in which it has a comparative advantage. In this case, what is the world output of books and televisions? (2.5 marks)