Question: That is the complete question. Thanks for the answer beforehand (2: 8%) The production possibilities curves for the two countries (A and B) producing two

That is the complete question. Thanks for the

That is the complete question. Thanks for the answer beforehand

(2: 8%) The production possibilities curves for the two countries (A and B) producing two commodities (x and y) are given as, (A) y=12 - 4x, (B) y=8-2.r. Before any trade, the consumption (as well as the production) occurs at (2,4) for A, and (3,2) for B. Find the production points for the two countries when they completely specialize based upon the comparative advantage. Also, calculate the maximum amount of consumed for the country B. For clarity, let's make two assumptions: the terms of trade are r: y=1:3, and the country B is still consuming 3 units of x as in autarky. (3: 8%) Let's consider the effect of subsidies, which also generates the dead weight loss. A subsidy creates a gap between the price received by sellers and the price paid by buyers. The supply and demand curves, respectively, are p=q and p=6-9. Now, the government pays $2 to the buyers of a good for each unit of the good they purchase. Determine how much this subsidy leads to a dead weight loss

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