Refer to your answers to Problem 31-7 when answering the following questions.

a. Which one of the following rates of exchange of portable power banks for flash memory drives will be acceptable to both nations: (i) 3 portable power banks for 1 flash drive; (ii) 1 portable power bank for 1 flash drive; or (iii) 1 flash drive for 2.5 portable power banks? Explain.

b. Suppose that each nation produces only the good for which it has a comparative advantage and agrees to the rate of exchange identified in part (a). Prior to trade, South Shore residents produced and consumed 30 portable power banks and 90 flash drives per hour, and East Isle residents produced and consumed 40 portable power banks and 30 flash drives per hour. Now, South Shore residents export the same quantity of their specialty good to East Isle that East Isle residents consumed prior to engaging in international trade. How many units of East Isle's specialty good does South Shore import from East Isle?

c. What is South Shore's hourly consumption of portable power banks and flash drives after the nation specializes and trades with East Isle? What is East Isle's hourly consumption of portable power banks and flash drives after the nation specializes and trades with South Shore?

d. What consumption gains from trade are experienced by South Shore and East Isle?
Problem 31-7

Consider the table and answer the questions that follow.

What is the opportunity cost of producing portable power banks in South Shore? Of producing flash memory drives in South Shore?

What is the opportunity cost of producing portable power banks in East Isle? Of producing flash memory drives in East Isle?

Which nation has a comparative advantage in producing portable power banks? Which nation has a comparative advantage in producing flash memory drives?