Exchange in an Island Economy. Robin and Terry are stranded on a deserted island and… 1 answer below »
Exchange in an Island Economy. Robin and Terry are stranded on a deserted island and consume two products, coconuts and fish. In a day, Robin can catch 2 fish or gather 9 coconuts, and Terry can catch 1 fish or gather 1 coconut.Output per dayRobin Terry Fish Coconuts Fish Coconuts2 9 1 1Terry has a comparative advantage fishing, and Robin has a comparative advantage gathering coconuts.Suppose that each person is initially self-sufficient. In a six-day week, Robin produces and consumes 36 coconuts and 4 fish, and Terry produces and consumes 4 coconuts and 2 fish.Now suppose Robin and Terry engage in specialization and exchange, trading 2 coconuts for 1 fish.If Robin and Terry consume the same number of fish as in the self-sufficient outcome, then specialization and exchange allow Robin to consume 10 additional coconuts (enter your response as an integer) and Terry to consume 4 coconuts (enter your response as an integer).
