Refer to the table below to answer parts a through e of this question. a.) Which town

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Question:

Refer to the table below to answer parts a through e of this question.

a.) Which town has the absolute advantage in solar panel production? Which town has the absolute advantage in natural gas production?

b.) Which town has the comparative advantage in solar panel production? Which town has the comparative advantage in natural gas production? Briefly explain how you know.

c.) Set up terms of trade for Econo Town and Externality Ville that would benefit both towns. Assume each town specializes in the good in which they have the comparative advantage.

d.) What combination of solar panels and natural gas should Econo Town produce? What combination of solar panels and natural gas should Externality Ville produce? Assuming they are allowed to trade with each other, why should each town produce this combination of solar panels and natural gas?

e.) Suppose the market price of each unit of solar panels is $100 and the market price of each unit of natural gas is $250. What is the maximum combined daily revenue of Econo Town and Externality Ville?