(a) Which industry would you expect to be relatively labour intensive, and which capital-intensive? Why (b) Draw production possibilities frontiers for each country keeping the production of rugs in the horizontal axis and the production of robots in the vertical axis. Assuming that consumer preferences are the same in both countries, add indifference curves and relative price lines under autarky. What are the differences in the relative price of rugs between the countries under autarky? (c) Depict the optimal production and consumption bundles when Canada and India open up to trade with each other. Explain what form will the trade pattern take. (d) Does free-trade make all individuals in Canada and India better-off? Explain why or why not.

(a) Which industry would you expect to be relatively labour intensive, and which capital-intensive? Why (b) Draw production possibilities frontiers for each country keeping the production of rugs in the horizontal axis and the production of robots in the vertical axis. Assuming that consumer preferences are the same in both countries, add indifference curves and relative price lines under autarky. What are the differences in the relative price of rugs between the countries under autarky? (c) Depict the optimal production and consumption bundles when Canada and India open up to trade with each other. Explain what form will the trade pattern take. (d) Does free-trade make all individuals in Canada and India better-off? Explain why or why not.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter33: International Trade

Section: Chapter Questions

Problem 6SCQ: Table 33.15 shows how the average costs of production for semiconductors (the chips In computer...

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