Reference no: EM133080617

Bangladeshi and Indian workers can each produce 4 cars a year. A Bangladeshi worker can produce 10 desktops a year, whereas an Indian worker can produce 5 desktops a year. To keep things simple, assume that each country has 100 million workers.

Based on the above information, answer the following questions (you must draw relevant diagrams where needed):

1. Draw the production possibilities frontiers for the Bangladesh and Indian economies.

2. For Bangladesh, what is the opportunity cost of a car? A desktop? For India, what is the opportunity cost of a car? A desktop? Put this information in a table.

3. Which country has an absolute advantage in producing cars? In producing desktop? Which country has a comparative advantage in producing cars? In producing In desktop? Explain your answer.

4. Without trade, half of each country's workers produce cars and half produce desktops. What quantities of cars and desktops does each country produce?

5. Starting from a position without trade, give an example in which trade makes each country better off,