Question 1

The figures below illustrate the production possibility frontiers for Hans and Renate.

1.1) Assume they specialize according to their comparativeadvantages,how many fish and coconuts will be produced in total?

______________coconuts_______________fish

1.2) Based on the graph above, draw the combined production possibility frontier. Use the horizontal axis to measure fish and the vertical axis to measure coconuts. Mark and label the efficient allocation between fish and coconuts for Hans and Renate in the figure.

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1.3) Draw the marginal cost curve for fish production. Use the vertical axis to measure the marginal cost for fish.

coconuts coconuts 8 Hans Renate 6 N fish fish 4