Question
The production possibilities frontiers in the figure to the right show how many bananas and coconuts you(Y) and your neighbor(N) can consume without trade. Suppose
The production possibilities frontiers in the figure to the right show how many bananas and coconuts you(Y) and your neighbor(N) can consume without trade.
Suppose you are initially consuming 7 bananas and 3 coconuts and your neighbor is initially consuming 3 bananas and 9 coconuts.
Now, suppose you and your neighbor specialize by each only producing the good for which you have a comparative advantage.
You give your neighbor half of your production for half of what he produces.
If you trade with yourneighbor, then you will have ___ additionalcoconut(s) after the trade and
____ additional bananas
At the sametime, your neighbor will be able to consume ____ additionalbanana(s) and will be better or worse off from trade.
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