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Suppose that countries X and Y produce and consume apple and bananas and Country X initially exports bananas to country Y.
a. Draw the production possibility frontier for the two countries and show their consumption and production points.
b. Work out the effects of the following changes on
1. International price of bananas
2. Output of both goods in both countries.(Show the changes in world relative supply and demand curves and the PPF of each country)
(i) A technological improvement that increases, for any allocation of resources, the output of bananas in country X.
(ii) A tariff levied by country Y on bananas.
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