Question:P1. Let’s assume there are only 2 countries that produce 2 good. More specifically, suppose that the United States (US) and the United Kingdom (UK) each have 2 units of productive resources, 1 used to produce Wine, the other Cloth. The US can produce 40 units of Wine with 1 unit of productive resources and 40 units of Cloth with 1 unit of productive resources. The UK can produce 20 units of Wine with 1 unit of productive resources and 10 units of cloth with 1 unit of productive resources. Using this information, please answer the questions below:*Who has an absolute advantage in the production of Wine? Cloth?*Who has a comparative advantage in the production of Wine? Cloth?*Given specialization, what is production before trade? After trade?*What are the gains from trade?*What is the “range” of potential exchange rates between US and UK?

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