Macroeconomics 11th Edition by Michael Parkin

Exercise 24

Gains from Trade
Use the following data to work Problem. Kim can produce 40 pies or 400 cakes an hour. Liam can produce 100 pies or 200 cakes an hour.
a. Draw a graph of Kim's PPF and Liam's PPF.
b. On your graph, show the point at which each produces when they spend 30 minutes of each hour producing pies and 30 minutes producing cakes.
c. On your graph, show what Kim produces and what Liam produces when they specialize.
d. When they specialize and trade, what are the total gains from trade
e. If Kim and Liam share the total gains equally, what trade takes place between them