Nowhereland is an island economy with population of 4 – Alice, Bob, Catherine and David. Everyday there are two survival activities under the northerly Sea of Ferocity: catching jellyfish and collecting seaweed. Both activities involve open water diving, requiring the use of an oxygen tank. Thus, a special kind of capital called “oxygen tank” is used in the production of these two goods. Each person possesses a different amount of oxygen tanks. The following table shows how many oxygen tanks each person has and how many are needed to produce each unit of the delicacies:

a) If everyone decides to catch jellyfish only, how many jellyfish can all of them produce? If everyone decides to collect seaweed only, how many seaweed can all of them produce?

b) What are the opportunity costs of catching jellyfish for each person? What are the opportunity costs of collecting seaweed for each person? Put your answers in the following table.

c) Who has the absolute advantage in catching jellyfish/collecting seaweed? Who has the comparative advantage in catching jellyfish/collecting seaweed?

d) Determine the acceptable range of trading price for 1 jellyfish in terms of a number of seaweed. Determine the acceptable range of trading prices for 1 seaweed in terms of the number of jellyfish.

Alice Bob Cathy 8 David Oxygen Tank Possessed (Tanks) Catching Jellyfish (Tank/Jellyfish) Collecting Seaweed (Tank/Seaweed) 10 15 1 2 2 3 2 3