Suppose that there is a new found country in the Pacific Ocean named Gondola. It has no technology and the only factor of production available is Gondolese labor. Gondola can produce Gondolese Cheese and silk. We know that each Gondolese worker can either produce 2 Gondolese Cheese or 3 units of silk. Assume that the PPF is a straight line, answer the following.

A ;From the information given, calculate the opportunity cost of Cheese and Silk in Gondola?

B; Discuss the cases under which Gondola will trade in the international markets. Also mention which good will it trade under each case.

C; Gondola can trade with either US(at a relative price ofPcheese/Psilk=4/3

) or Mexico(at a relative price ofPcheese/Psilk=2/4

). Which country will Gondola choose to trade with if it wants to increase real wages at home in terms of Cheese? Briefly explain your answer.