4. (20 points] The gure below is the Production Possibility Frontier [PPF] of Patagonia, where only two products are produced, cloth 8: bread. Today, Patagonia is producing on its PPF at point-A, 6 units of bread and 2 units of cloth. choth By and large the people of Patagonia are content with the consumption bundle at point-A, which means both their external and internal needs for warmth are satised in the most economically efficient manner possible, given their available productive resources and known technology. a. If a person in this country wanted to purchase one unit of bread, what would be the price he or she would have to pay in terms of cloth (Pb/PC)? b. Next year, Patagonia joins the WTO (World Trade Organization). They discover that in the World markets 1 unit of bread is worth 1 unit of cloth; Pb/Pc = 1. What is the logical production point they should strive for? Why? c. Patagonia wishes to enjoy to the fullest gains from trade, but is not willing to give up even one piece of bread from the 6 units they were consuming in their original autarkic (closed economy) state. If their new consumption point is a point we shall designate as point-B, where would this point be? d. Draw the new Consumption Possibility Frontier after trade and show point-B on it. e. How can you prove that Patagonia has in fact gained from the availability of trade, and that their new situation is superior to the pre-trade situation with which they were quite content