Using the Ricardian Model and the hypothetical production information in the table to answer the questions.

Swords Belts

Estonia 200 100

Morocco 80 120

a. Assume that production and consumption without trade in Estonia is 50 belts and 100 swords, and Morocco's production and consumption without trade is 60 belts and 40 swords. Label both axes, the vertical and horizontal intercepts, pre-trade production and consumption points.

b. Prior to trade, what was the opportunity cost to produce 1 belt in Estonia? Prior to trade, what was the opportunity cost to produce 1 belt in Morocco?

c. Suppose each country specializes in the good for which it holds a comparative advantage. With specialization (compared to autarky), what is the gain intotal belt production? What is the gain in total sword production?

d. Would terms of trade of 1 belt for 3 swords be acceptable? Explain.

e. Would terms of trade of 1 belt for 1.25 swords be acceptable? Explain.

f. Using the acceptable terms of trade you determined in f or g, suppose 60 belts are traded, how many belts and swords will each country consume? Plot these points on each PPF.

g. How many belts and swords does each country gain compared to the "without trade" numbers?