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.

5) Find the world production of bananas if Malta produces 500 tons of avocados?

6) How many tons of bananas are produced in Netherlands if the world production of avocados is 700 tons

7) What can you say about the world production of avocados if only Netherlands benefits from trade?

8) Which country benefits from trade (Malta, Netherlands, both or neither) if the price of bananas is $4/ton and the price of avocados is $16/ton.