Unit 2 FRQ Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. 3. Chile and Ecuador are trading partners. Both countries have the same amount of resources and can produce fish and/or melons. The table below shows the maximum number of units of fish or melons that can be produced by each country. Assume constant opportunity costs in both countries. Fish Melons Chile 30 3 Ecuador 30 10 (a) Assume that prior to trade, Ecuador is producing 15 units of fish and 5 units of melons. What can you conclude about the use of resources in Ecuador? Explain using the production possibilities curve model. (b) Which country has the comparative advantage in the production of fish? Explain using numbers. (c) Now assume each country specializes in the production of the good in which it has a comparative advantage, and the terms of trade are 12 units of fish for 1 unit of melons. Will Ecuador gain from trade? Explain. (d) Suppose the maximum production of melons in Ecuador decreases. How will this affect Ecuador's opportunity cost of producing fish? Explain. (e) Assume Chile's civilian working-age population is 40 million, the labor force participation rate in Chile is 50% , and the unemployment rate is 10% . Calculate the number of employed people in Chile. Show your work