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Island A produces 10 fish and 20 bananas a day and island B produces 17 fish and 8 bananas a day. 1) What are the
Island A produces 10 fish and 20 bananas a day and island B produces 17 fish and 8 bananas a day. 1) What are the absolute and comparative advantages of these islands? 2) Draw a Production Possibilities Curve for them a) before trade b) after trade and specialization. 3) What is the MRT (Marginal rate of substitution for Island A) before specialization? 4) How much extra product do they produce because of specialization? 5) How can they share this extra product? Suggest your calculation
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