Assume that Anna and John can grow pears and bananas and have the same working time.

If John spends all his working time on growing one fruit, he can produce 100kg of pears or 50kg of bananas.

If Anna spends all her working time on growing one fruit, she can produce 70kg of pears or 70kg of bananas.

1. Explain a difference between the absolute advantage and comparative advantage in producing pears.

2. Who has an absolute advantage in producing pears, bananas? Who has a comparative advantage in producing pears, bananas?

3. Should Anna and John specialise? Explain.

4. Is it possible to change the numbers so that John has an absolute advantage in producing both goods? Explain. If the answer is yes, give an example.

5. Is it possible to change the numbers so that John has comparative advantage in producing both goods? Explain. If the answer is yes, give an example.