Suppose that there are 10 million workers in Canada and South Korea and each worker in Canada and South Korea can produce 4 cars per year.
(a) Graph the production possibilities frontier of the Canadian and South Korean economies. (6 Mark)
(b) For Canada, what is the opportunity cost of a car? What is the opportunity cost for grain? For South Korea, what is the opportunity cost of a car? For grain? (8 Marks)
(c) Which country has an absolute advantage in producing cars? In producing grain.(2 Mark)
(d) Which country has a comparative advantage in producing cars? In producing grain. (2 Mark)
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