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Can you answer this question with diagrams and brief explanations? 3. There are two nations: Domum and Aliena. Each can produce two goods: Marijuana and

Can you answer this question with diagrams and brief explanations?

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3. There are two nations: Domum and Aliena. Each can produce two goods: Marijuana and Gold. In a single year, Domum can produce 20,000 tons of marijuana, or 80,000 tons of gold. By contrast, in a single year, Ahena can produce 10,000 tons of marijuana, or 5,000 tons of goldEl a) Which country has absolute advantage in marijuana? {3%) h) Which country has absolute advantage in gold? (3%) c) lWhich country has comparative advantage in marijuana? (3%) d) Which country has comparative advantage in gold? (3%) e) Suppose that, prior to trade, both nations are in a state of autarky. Domurn produces 10,000 tons of marijuana, and 40,000 tons of gold. Aliena produces 10,000 tons of marijuana, and n0 gold. Draw this situation in two separate PPF diagrams, one for each nation. {10%) f} Consider the situation in part (e). Suppose that Domurn gives Aliena 1,000 tons of gold in exchange for 1,000 tons of marijuana. Draw this situation in two separate PPF diagrams, one for each nation. (10%) e) Does the trade in part (f) result in an improvement for both nations? Explain why or why not. (5%) f} If each country were to specialize in the good for which it has comparative advantage, how much would each produce? (3%)

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