QUESTION 1 Assume your team can harvest different combinations two goods (bananas and crabs). The table below shows these combinations. a. Draw PPF Using the information from this table: (you may draw a graph on a draft paper) b. Calculate opportunity cost of bananas if you decide to increase harvest of bananas from 15 to 20; c. Calculate the slope of the PPF if you increase production of bananas from 15 to 20; d. Will you harvest 15 bananas and 15 crabs? Why? Bananas Crabs 30 15 27 20 20 23 12 25

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.