Using equal amounts of resources, the city of Cliffordland can produce 10 cars of 10 trucks, whereas the city of Econberg can produce 4 cars or 8 trucks. 1. Which country has the absolute advantage in cars? Explain. Clifforland, Since it's producing the most amount of Cars unik, being constant to it's inputs 2. Calculate the opportunity cost of producing one car in Cliffordland. 1 car costs | truck / I truck costs Icar 3. Calculate the opportunity cost of producing one truck in Econberg. Cars Cars C 10 trucs 10 10 8 4 I truck costs 2 cans / 1 car casts 2 tricks. 4. Which country has the comparative advantage in trucks? econberg 5. Which country has the comparative advantage in cars? Cliffordland 6. If the two countries specialize and trade, which country will import cars? Explain your reasoning. Cliffordland because 7. If the terms of trade are 4 cars for 1 truck, would trade be advantageous for Cliffordland? Explain your reasoning. No because Clifforland produces the same amount of cars for trucks 4 Cliffordland Econberg Trucks B 10 8. If the terms of trade are 4 cars for 1 truck, would trade be advantageous for Econberg? Explain. yes because orginally econbury dues I car for 2 trucks, meaning 4 cars for I truck and be advantages for them 9. Assume that Cliffordland and Econberg specialize and trade in a way that is advantageous for both of them. Explain what will happen to the number of trucks that Econberg can produce. the number of trucks that ecombing preduces will Part 2: Practice: The table below gives the production possibilities of two countries that are producing cookies and milk. The numbers represent the amount of hours it takes to produce one crate of cookies and one barrel of milk. 10. Identify which country has an absolute advantage in the production of cookies. Explain. INPUT HOURS OF LABOR Country Atlantis Neverland Cookies Milk 2 hours 1 hour 4 hours 11. Identify which country has a comparative advantage in the production of cookies and which has a comparative advantage in the production of milk. Explain. 1 hour 12. Assume that the two countries decide to specialize according to their comparative advantages and that one milk is exchanged for one cookie. Should Atlantis produce milk domestically or import milk from Neverland? Explain. 13. Identify terms of trade that would be advantageous for both countries. Explain how you determined your answer.