Assume that people in both countries eat only fruit salad that consists of 1kg of bananas and 1kg of avocados, i.e., the consumption line is given by equation B=A. Assume that price of bananas is $3 per ton.

1) Find the total world's production of bananas?

2) Which country benefits from trade (Malta, Netherlands, both or neither)?

3) If price of bananas is $3 per ton, what is the price of avocados?

4) Find the Gross Domestic Products (GDP) of Malta and Netherlands if the price of bananas is $3 per ton.

5) If the price of bananas is $3

a) How many tons of avocados and bananas are consumed in Malta?

b) How many tons of avocados and bananas are consumed in Netherlands?

6) Find production (and consumption) in autarky (i.e., when trade is not possible) a) in Malta b) in Netherlands

7) Compare your answers in questions 4 and 5 and identify which country benefits from trade in this model?