International management

Consider the following scenario and answer questions based on it. Lesotho and Botswana are to engage in the trade of maize and bananas. Each country has an equal amount of resources required to produce both maize and bananas. 500 units of resources are available in each country In Botswana it takes 5 resources to produce one ton of bananas and 20 resources to produce one ton of maize. In Lesotho it takes 25 resources to produce one ton of bananas and 5 resources to produceon ton of maize. Questions: 3. 1If Botswana were to produce bananas only and no maize, how many tons would it produce? (1) 3.2If Botswana were to produce maize only and no bananas, how many tons would it produce? (1) 3.3If Lesotho were to produce bananas only and no maize, how many tons would it produce? (1) 3.4If Lesotho were to produce maize only and no bananas, how many tons would it produce? (1) 3.5Based on the answers given from 3.1 to 3.5 above, sketch the answers on the production possibility curve, clearly label your graph. (2) 3.6Based on the answers given from 3.1 to 3.5 above, which country would you encourage to specialise in the production of maize and bananas respectively? Why? (2) 3.7Suppose each country decides to dedicate half of their total resources towards the production of both bananas and maize, how many tons of both bananas and maize would each country consume, also show the "total world" out put, record these values under the heading: Consumption before trade(5) 3.8Suppose these countries enter intoa trade agreement that would see each specializing only in a product which they have absolute advantage in, has total world output improved? By how much? (for each product)(4) 3.9If they decide to exchange (on one-to-one price base) half of their specialised products, compared to consumption before trade, how has specialisation impacted on individual consumption? What about the world output? (2) 3.10 Are countries better off trading against each other or not? Substantiateyour answer with your previous answers. (2)