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Answer the questions based on the following production possibilities data for Narnia and Samosa. All numbers are in 1,000'3. Narnia Production Possibilities: A B C
Answer the questions based on the following production possibilities data for Narnia and Samosa. All numbers are in 1,000'3. Narnia Production Possibilities: A B C D Com puter Chips 80 60 40 20 0 Fuel Injectors O 20 40 60 80 PH Samosa Production Possibilities: A B C D Com puter Chips 40 30 20 10 0 Fuel Injectors O 20 40 60 80 I'l'l Questions: 1. If trade occurs between Narnia and Samosa, which nation should export which product? Why? 2. Assume the countries engage in trade and Narnia exports computer chips to Samosa in exchange for fuel injectors. What is the least amount of fuel injectors Narnia will accept for one computer chip? What is the most amount of fuel injectors Samosa will be willing to trade for one computer chip? 3. Assume that prior to specialization and trade, Narnia and Samosa chose production possibility "C." Now each specialized according to comparative advantage. What will be the resulting gains from trade? Explain
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