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The following are hypothetical production possibilities tables for Canada and the United States. For each line required, plot any two or more points on the line.
(a) Plot Canada's production possibilities curve by plotting at least 2 points on the curve.
(b) Plot the United States' production possibilities curve by plotting at least 2 points on the curve on the graph above.
(c) What is each country's cost ratio of producing Peaches and Apples?
(d) Which economy should specialize in which product?
(e) Plot the United States' trading possibilities curve (by plotting at least 2 points on the curve) if the actual terms of the trade are 1 apple for 1 peach.
(f) Plot the Canada' trading possibilities curve (by plotting at least 2 points on the curve) if the actual terms of the trade are 1 apple for 1 peach.
(g) Suppose that the optimum product mixes before specialization and trade were B in the United States and C in Canada. What are the gains from specialization and trade?
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