For each country, use the previous graph to compute the equalizing price, consumption and production at that price, and the quantity of exports and imports when transportation costs equal $4,000. Enter these amounts into the last two rows of the previous table. Compare free trade in the absence of transportation costs with the case when transportation costs are included. Which of the following statements about how the trade between Glako and Borville differs in the presence of transportation costs relative to trade when then are no transportation costs are correct? Check all that apply. () Glako will produce less, consume mare, and export less. [ Borville will produce less, consume more, and export less. [ Glako will produce more, consume less, and import less. [J Borville will produce more, consume less, and import less. 6. Transportation costs and comparative advantage The following graph shows a fictional world economy that consists of only two countries, Glako and Borville. Both countries produce airplanes under increasing-cost conditions. Note that the left-hand part of the diagram is a mirror image of a standard supply-demand diagram, and therefore the supply and demand curves slope in directions opposite their usual directions. , Glako Borville 20 18 ._-|- 16 + % 1 +12 \\ %+ PRICE OF AIRPLANES (Thousands of dollars) w o -~ + Dg 1098 7654321 123456728910 AIRPLANES In the absence of trade (that is, autarky), the equilibrium price in Glako is, and the equilibrium price in Borville is 3 (Hint: Enter all monetary values in full. For example, $7,000 rather than $7.) In the absence of trade, which of the following statements is correct? O Borville has the comparative advantage in production of airplanes. (O Glako has a comparative advantage in the production of airplanes. (O Glako and Borville are equally good at producing airplanes. Now suppose both countries open up to international trade with each other. For each country, use the previous graph to compute the equalizing price, consumption and production at that price, and the quantity of exports and imports when there are no transportation costs. Enter these amounts into the first two rows of the following table. Equalizing Price Consumption at Equalizing Price Production at Equalizing Price Exports Imports (Dollars) (Airplanes) (Airplanes) (Airplanes) (Airplanes) Without Transportation Costs Glako 1 Borville With Transportation Costs Glako || 0 00 0 0 0 00 0 00 Borville Now suppose that the per-unit cost of transporting a airplane between Glako and Borville is $4,000