Nicki	Kamal
X	Y	X	Y
100	0	300	0
50	5	150	30
0	10	0	60

1) If each person specializes in the production of the good for which they have the comparative advantage, then _______ would specialize in the production of good Y, and _______ would specialize in the production of good X. (Hint: Calculate the opportunity cost of producing X and Y for each individual.)

2) Suppose that Kamal and Nicki each specializes in the production of the good in which each has a comparative advantage.

Fill in the top row of the following table to indicate Kamal's and Nicki's output of each good.

Before Trade, with Specialization

After Trade

_____________________ ____________________ ____________________ ___________________

_____________________ ____________________ ____________________ ____________________

After specialization, suppose the two agree on a price of 9 units of good X for each unit of good Y. When the two individuals make the trade, they exchange 90 units of good X for 10 units of good Y. Recall that the individual who has specialized in the production of X would trade 90 units of good X and receive 10 units of good Y, while the individual who specialized in the production of good Y would trade 10 units of good Y and receive 90 units of good X.

In the previous table, fill in the second row to indicate the amounts of good X and good Y each individual has after the trade.