The countries of Figistan and Blah are small island countries inthe South Pacific. Both produce fruit and timber. Each islandhas a labor force of 1,200. The following table gives productionper month for each worker in each country.BASKETS OFFRUITBOARD FEETOF TIMBERFigistan workers 10 5Blah workers 30 10Productivity of one worker for one month
a. Which country has an absolute advantage in the productionof fruit? Which country has an absolute advantage in theproduction of timber?
b. Which country has a comparative advantage in the productionof fruit? of timber?
c. Sketch the ppf ’s for both countries.d. Assuming no trading between the two, if both countrieswanted to have equal numbers of feet of timber and basketsof fruit, how would they allocate workers to the two sectors?
e. Show that specialization and trade can move both countriesbeyond their ppf ’s.