Answer the next three questions on the basis of the following production possibilities data for Narnia...

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Answer the next three questions on the basis of the following production possibilities data for Narnia and Somosa. All data are in 1000s. NARNIA PRODUCTION POSSIBILITIES: A B C D E Computer chip 80 60 40 20 Fuel injectors 0 20 40 60 80 SOMOSA PRODUCTION POSSIBILITIES: A B C D 40 30 20 10 Computer chip Fuel injectors 0 40 20 60 80 (a)lf trade occurs between Narnia and Somosa, which nation should export what product? Why? (b)What are the limits of the terms of trade between Narnia and Somosa? (c) Assume that prior to specialization and trade, Narmia and Somosa chose production possibility "C." Now each specializes according to comparative advantage. What will be the resulting gains from trade? Explain your answer. Answer the next three questions on the basis of the following production possibilities data for Narnia and Somosa. All data are in 1000s. NARNIA PRODUCTION POSSIBILITIES: A B C D E Computer chip 80 60 40 20 Fuel injectors 0 20 40 60 80 SOMOSA PRODUCTION POSSIBILITIES: A B C D 40 30 20 10 Computer chip Fuel injectors 0 40 20 60 80 (a)lf trade occurs between Narnia and Somosa, which nation should export what product? Why? (b)What are the limits of the terms of trade between Narnia and Somosa? (c) Assume that prior to specialization and trade, Narmia and Somosa chose production possibility "C." Now each specializes according to comparative advantage. What will be the resulting gains from trade? Explain your answer.

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a Narnia should export computer chips and Somosa should export fuel injectors Narnia is the lowcost ... View the full answer