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Take Home Problem 1 Answers

1. Krakosia! The land is more productive there, no matter what you grow!
2. Krakosia, because each acre can grow more rice than an acre in Lugash.
3. Krakosia, again. Same reason.
4. 4,000 tons (2,000 times 2)
5. 3,000 tons (3,000 times 1)
6. 6,000 tons (2,000 times 3)
7. 3,000 tons (3,000 times 1)
8. (c) and (d). (d) is possible but not efficient!
9. (d)
10. (c) in other words, all inputs are not efficiently used
11. –answer given in class–
12. 3,000 tons of rice and 2,000 tons of wheat
13. 2,000 tons of rice and 1,000 tons of wheat
14. 3,500 tons of rice and 2,000 tons of wheat
15. 2,500 tons
16. 2,500 tons of rice and 1,000 tons of wheat
17. Better off. They can consume 500 more tons of rice than without trade.
18. Better off. They can also consume 500 more tons of rice than without trade.
19. They have a comparative advantage in the production of wheat, even though they do not have an absolute advantage!

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