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Please refer to the question attached below 4. Suppose that Australia and New Zealand both produce pears and plums. The following table shows combination of

Please refer to the question attached below

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4. Suppose that Australia and New Zealand both produce pears and plums. The following table shows combination of the goods each country can produce in a year. Australia New Zealand Plums (000' tons) Pears (000'tons) Plums (000' tons) Pears (000'tons) 15 12 Which country has a comparative advantage in producing plums? Which country has a comparative advantage in producing plums? Suppose that Australia is currently producing 1000 tons of plums and 6000 tons of pears and New Zealand is currently producing 3000 tons of plums and 6000 tons of pears. Demonstrate that Australia and New Zealand can be both better off if they specialize in producing only one good and then engage in trade. (6 marks)

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