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.

9) Assume that the price of bananas is $10/ton and the price of avocados is $5/ton. What will happen (increase, decrease, stay the same) to the world production of bananas if the price of avocados increases to $10? Explain!

10) Assume that the price of bananas is $5/ton and the price of avocados is $20/ton. Assume also that people in both countries consume avocados and bananas in the same fixed proportion. Which country will end up selling avocados?