Consider the following table. country a country bbananas 1 5apples 4 2numbers denote hours to produce 1 unitwhat are the world's per-unit gain for bananas if country a and b specialize according to their absolute advantage? what are the world's per-unit gain for apples if country a and b specialize according to their absolute advantage? in order to answer, ask yourself: (1) who the absolute advantage at what? (2) if country a and b specialize according to absolute advantage, who gives up the production of bananas? who gives up the production of apples? (3) how many units of bananas are gained by the country specializing in bananas, any time this country gives up 1 apple? (4) how many units of apples are gained by the country specializing in apples, any time this country gives up 1 banana? (5) finally: the world is composed by country a and country b together. to find the world's per-unit gain, sum up gains and what we give up for both country a and country b, for both bananas and apples. a: 4 extra bananas; 2.5 extra applesb: 1 extra banana; 1 extra applec: not enough informationd: 3 extra bananas; 1.5 extra apples

Suppose you win a small lottery and have the choice of two ways to be paid: you can accept the money in a lump sum or in a series of payments over time. if you pick the lump sum, you get $2,950 today. if you pick payments over time, you get three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. 1) at an interest rate of 6% per year, the winner would be better off accepting the (lump sum / payments over time), since it has the greater present value. 2) at an interest rate of 9% per year, the winner would be better off accepting the (lump sum / payments over time), since it has the greater present value. 3) years after you win the lottery, a friend in another country calls to ask your advice. by wild coincidence, she has just won another lottery with the same payout schemes. she must make a quick decision about whether to collect her money under the lump sum or the payments over time. what is the best advice to give your friend? a) the lump sum is always better. b) the payments over time are always better. c) it will depend on the interest rate; advise her to get a calculator. d) none of these answers is good advice.