1.Two countries, Gamma and Sigma produce tea and pots. If it puts all of its resources in producing tea Gamma can produce 120 teas per day. Alternatively, if it puts all of its resources in producing pots, Gamma can produce 120 pots per day. Their neighbors, Sigma can produce at most 80 teas per day or 40 pots day.

a. Which country has the absolute advantage in producing pots?

b. What is the opportunity cost of producing one pot in Sigma?

c. Should these countries trade? If yes, which one should specialize in tea and which one in pots? Explain.

d. What should be 'the world' price of tea (if these two are the only 2 countries in the world)?