1. Problem 2.12 Production Possibilities Canada France
Steel (tons) ,200
Aluminum (tons) 1,
Consumption Choice
Steel (tons)
Aluminum (tons)
Draw it.

2. Problem 2.12 (continued) MRT (cost) of aluminum in terms of steel?
Who should specialize in what?
Show points of specialization. Compare these outputs with autarky outputs.
What are the terms of trade (price) limits for trade to be mutually beneficial?
If terms of trade settle at 1:1, show trade/consumption possibilities for both countries.
If 500 steel is traded for 500 aluminum, who is better off? By how much?
Describe the trade triangles for both countries: what they give/what they get.