Consider two countries, Tableland and chairland, each capable of producing tables and chairs. Chairland can produce 40 chairs and zero tables or zero chairs and 40 tables per day. Tableland can produce 18 chairs and zero tables or zero chair and 26 tables pre day. In each country there is a fixed trade-off of tables for chairs.
a) Draw the two production possibilities curves.
b) suppose that each country is initially self-sufficient and divides its resources equally between the two goods. How much does each country produce and consume?
c) which country has the comparative advantage in each good?
d) which country has the absolute advantage in each good?
