Malaysia and Turkey both produce only lemons and circuit boards. Each country has 960 laborers. In one month, Malaysia can produce either 80 tonnes of lemons or 320 tonnes of circuit boards. Turkey can produce either 120 tonnes of lemons or 30 tonnes of circuit boards. The countries can also devote laborers to both industries in order to produce and consume both goods.
Suppose that initially, Turkey and Malaysia decide to allocate workers to both types of production. Turkey is currently consuming 20 tonnes of lemons and 25 tonnes of circuit boards, while Malaysia is consuming 30 tonnes of lemons and 200 tonnes of circuit boards.
Remember, this is a long-answer question. You must show all calculation to receive credit for your work. No work, no credit.
Part a) Which country has an absolute advantage in producing lemons? Circuit boards?
Part b) Which country has a comparative advantage in producing lemons? Circuit boards?
Part c) If they agree to specialize and trade, what will Malaysia produce? What will Turkey produce?
Part d) If the countries agreed to exchange 50 tonnes of circuit boards for 75 tonnes of lemons, calculate the gains to specialization and trade for each country.