Applied Problems on Trade Name: 1. The following table shows the total number of hats or baskets that the tribes of Dakal and Sele can produce given their resources. Hats Baskets Dakal 10 70 Sele 5 30 a) Who has an absolute advantage in the production of Hats? b) Who has an absolute advantage in the production of Baskets? c) Find the Opportunity Costs of producing Hats and Baskets for both tribes: For Dakal: OC of 1 Hat= OC of 1 Basket = For Sele: OC of 1 Hat= OC of 1 Basket d) Who has comparative advantage in the production of Hats? In Baskets? Comparative Advantage in Hat= Comparative Advantage in Basket = e) What should the terms of trade have to be both tribes to gain from trade? (Give me a range) 1 Hat= 1 Basket = f) If the terms of trade were 1 Hat = 7 Baskets, who would refuse to trade - the tribe selling hats or the tribe selling baskets? Circle the correct answer: o Tribe selling hats will refuse Tribe selling baskets will refuse Neither tribe will refuse Both tribes will refuse