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Bonus. (I point) Production possibilities frontier, gains from trade, comparative advantage, absolute advantage, and returns to scale. Suppose that there are two countries, A and
Bonus. (I point) Production possibilities frontier, gains from trade, comparative advantage, absolute advantage, and returns to scale. Suppose that there are two countries, A and B. The production possibilities frontier of country A is given by vooremulsA | vishA = 8, and the production possibilities frontier of country B is given by voocomrades | vishs = 8 where coconuts denotes the amount of coconuts produced by country i and fish denotes the amount of fish produced by country Assume that the utility function of each country i is given by the expression U(commuts,, fish,) = min (coconuts, fish) where coconuts, denotes the amount of coconuts consumed by country i and fish, is the amount if lish consumed by country . Suppose that all gains from trade are divided equally between the countries. Determine the utility of each country when the agents can trade. Write the utility of country A here _ - and the utility of country B here . and provide a detailed explanation below (if you submit answers on your own answer shock, please write these numbers using LARGE print)
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