Economic Models and Comparative Advantage1. Your Assignment should have a cover sheet with the following information:● Your Name● Course Number● Section Number● Date2. You may submit your Assignment using the Unit 2 Assignment template.3. Your answers should follow APA formatting by being in double spaced paragraph format, withcitations to your sources and, at the bottom of your last page, a list of references. Your answersshould also be in Standard English with correct spelling, punctuation, grammar, and style.4. Respond to the questions in a thorough manner, providing specific examples of concepts,topics, definitions, and other elements asked for in the questions. Your paper should be highlyorganized, logical, and focused.5. Required Format:● Correct APA format for answers (Title Page with name, course number, section number,unit number, date, answers double spaced, in Times New Roman 12-point font).Review the APA formatting found in the Writing Center.● Correct citations within answers● Standard English with no spelling or punctuation errors● Correct references at the beginning of a new page at the end of your paperQuestions:According to the author, economists approach economic problems with economic models, andthese models will help familiarize you with how economists approach economic problems. Themodels also help explain how individuals and countries gain from trade. Accordingly, tradeallows people to specialize in the production of goods and services for which they havecomparative advantages and, then trade for goods and services that other people producebased on their comparative advantages.The Assignment questions deal with the application of the economic models and the roles ofcomparative advantage in the gains from trade. Watch the Chapter 2: “What Kinds of Roles doEconomists Take on and Which is More Important?” video and the Chapter 3: “Outsourcing”video.Page 2 of 4[BU204 | Macroeconomics]1. Explain the difference between absolute advantage and comparative advantage. Which is moreimportant in determining trade between individuals or countries? Is it absolute advantage orcomparative advantage? Why?2. Let us assume two students must prepare a presentation for their marketing class. As part oftheir class presentation, they must do a series of calculations and prepare 50 PowerPoint slides.It would take Larry 10 hours to do the required calculation and 10 hours to prepare the slides. Itwould take Kate 12 hours to do the series of the calculations and 20 hours to prepare the PPTslides.a. How much time would it take the two students to complete the project if they dividethe two tasks equally?b. How much time would it take the two students to complete the project if they usecomparative advantage and specialize in calculating or preparing slides?c. If Larry and Kate have the same opportunity cost of $5 per hour, is there a bettersolution than for each to specialize in calculating or preparing slides?3. Let us assume there are only two countries in the world, and the two countries face the followingproduction possibilities frontiers. Further assume that the two countries produce popcorn andpeanuts.Country A’s Production PossibilitiesFrontierCountry B’s Production PossibilitiesFrontierPage 3 of 4[BU204 | Macroeconomics]a. Assume that country A and country Bdecide to use half of the resources in theproduction of each good. Indicate the pointsof the maximum output of each good on thegraphs for each country as point A undersuch resource use.b. Assume the two countries chooseautarky and do not trade. What would bethe total world production of popcorn andpeanuts under the autarky?c. Assume that each country decides tospecialize in either popcorn or peanutbased on its respective comparativeadvantage. Under the specialization, whatis the total production of popcorn andpeanuts?d. Assume country A and B decide to trade100 units of popcorn for 100 units ofpeanuts, show on the graphs the gain eachcountry receives from trade. Label thesepoints on the two graphs “B.”Page 4 of 4[BU204 | Macroeconomics]Directions for Submitting Your AssignmentBefore you submit your Assignment, you should save your work on your computer in a locationand with a name that you will remember. Make sure your Assignment is in the appropriateformat (Microsoft Word), then, when you are ready, you may submit to the Dropbox.Unit 2 Assignment: Economic Models and Comparative AdvantageContent and AnalysisPointsPossiblePoi