1. possible output combinations of the two fruits using all resources and currently available technology.
   1. Graph the Fruit Farm's production possibilities frontier. Put oranges on the horizontal axis and papayas on the vertical axis. Be sure to identify the output combination points on your diagram.

Table 1

McStevens Fruit Farm
Possible Output Combinations	Oranges	Papayas
(thousands of kilos)	(thousands of kilos)
A	140	0
B	120	20
C	100	38
D	80	52
E	60	64
F	40	74
G	20	80
H	0	82

1. Suppose the Fruit Farm is currently producing at point C. What is the opportunity cost of producing an additional 14,000 kilos of papayas?
2. Suppose the Fruit Farm is currently producing at point C. What happens to the opportunity cost of producing more and more papayas? Does it increase, decrease or remain constant? Explain your answer.
3. Suppose the Fruit Farm is currently producing at point F. What happens to the opportunity cost of producing more and more oranges? Does it increase, decrease or remain constant? Explain your answer.
4. Suppose the Fruit Farm is plagued by a maggot infestation which destroys orange trees but not papayas. Explain with a graph what happens to the PPF.

(35 points)

1. The following table shows the amount of good A and good B that two countries could produce if they devoted all their resources to that good. Assume both countries have the same amount of resources and the trade-off between good A and good B remains constant as resources are shifted from one good to another. (30 points)
   1. Which country has the absolute advantage in good A? In good B?

	Canada	India
Good A	400	300
Good B	950	500

1. What is Canada's marginal opportunity cost of producing good A? good B?
2. What is India's marginal opportunity cost of producing good A? good B?
3. Which country has the comparative advantage in good A? In good B?
4. Based on the data given, what is the terms of trade range for good A in terms of units of good B?