For all questions, consider the following economy: Two countries, Malta (M) and Netherlands (N), can each produce only two products, avocados (A) and bananas (B). Production Possibilities curves for M and N are given by the following equations:

for Malta: A+2B=2000

for Netherlands: 4A+B=1600

Countries can freely trade with each other. 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.

15) 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?

16) Find production (and consumption) in autarky (i.e., when trade is not possible)

a) in Malta b) in Netherlands