Question II: The table below shows the production possibilities for the Silva and Coutinho economies. Both

economies are based solely on the production of Hamburger and Motorcycles. Assume the opportunity cost of

producing Hamburger and Motorcycles is constant in both nations.

Silva Production Possibilities

Quantity of

Motorcycles

100

0

Quantity of

Hamburger

0

50

Coutinho Production Possibilities

Quantity of

Hamburger

0

100

Quantity of

Motorcycles

100

0

a. Which nation has absolute advantage in the production of Hamburger?

b. Which nation has the comparative advantage in the production of Hamburger? Explain.

c. If the nations of Silva and Coutinho could trade, what product will be exported by Silva? Explain.