1. The maximum amount of steel or aluminum that Canada and France can produce if they use all the resources available to them, with the best Cechnology is indicated in the table below: Steel (in tons) Aluminum (in tons) Canada 500 1,500 France 1,200 800 a. Assume constant-cost of production, graph the PPF each for Canada and France, with aluminum on the x-axis and steel on the y-axis. o. Canada produces and consumes 600 tons of aluminum and 300 tons of steel. France produces and consumes 400 tons of aluminum and 600 tons of steel. Clearly mark these two points under autarky, on the appropriate graph. c. Determine which nation would specialize (if at all) in production of either steel or aluminum. What would be the range of the terms of trade for each product? d. If France and Canada agree on a 1:1 terms of trade (1 ton of steel: 1 ton of aluminum), graph the Trade possibility line for each country. e. Assume 500 tons of steel is traded, determine the consumption point for each country on the graph. Is this trade beneficial to each country? f. Determine the trade triangle for each country.

1. The maximum amount of steel or aluminum that Canada and France can produce if they use all the resources available to them, with the best Cechnology is indicated in the table below: Steel (in tons) Aluminum (in tons) Canada 500 1,500 France 1,200 800 a. Assume constant-cost of production, graph the PPF each for Canada and France, with aluminum on the x-axis and steel on the y-axis. o. Canada produces and consumes 600 tons of aluminum and 300 tons of steel. France produces and consumes 400 tons of aluminum and 600 tons of steel. Clearly mark these two points under autarky, on the appropriate graph. c. Determine which nation would specialize (if at all) in production of either steel or aluminum. What would be the range of the terms of trade for each product? d. If France and Canada agree on a 1:1 terms of trade (1 ton of steel: 1 ton of aluminum), graph the Trade possibility line for each country. e. Assume 500 tons of steel is traded, determine the consumption point for each country on the graph. Is this trade beneficial to each country? f. Determine the trade triangle for each country.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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