Question 1 Robinson Crusoe and his pal Friday are shipwrecked. For food, what they eat depends on what they can collect. In one week, Crusoe can gather 15 coconuts or 5 fish. Friday, on the other hand, and collect 10 coconuts or 10 fish. Can they trade to make themselves better off? a) Who has the absolute advantage in coconuts? In fish? b) Who has the comparative advantage in coconuts? In fish? c) Explain the opportunity costs of fish and coconuts for both Crusoe and Friday. d) What should each specialize in? That is, should Crusoe trade coconuts for fish, or the other way around? What about Friday? e) Finally, propose a trade and show if and how both can become better off. Question 2 Consider the market for minivans. For the following events, use supply and demand analysis to predict changes in the market outcome (equilibrium price and quantity of minivans). (Use graphs.) a) United Auto Workers (UAW) of America, the largest union of auto workers, demand and receive higher wages for auto workers b) A new study released by the Federal Department of Transportation states that minivans are the safest form of auto travel c) The stock market soars, causing a rise in the general income of consumers d) There is a technological advance in the production of minivans e) Consumers expect the price of minivans to fall in the future f) The price of gasoline falls dramatically g) Auto makers expect the price of minivans to rise in the future h) The price of SUV's rises (There may be 3 possible answers to this one.)