Assume a Ricardian,constant-Cost World The United States Has a Labor Force of 1,000 Workers,and

question 26

Essay

Assume a Ricardian,constant-cost world.There are two countries,the United States and Canada.Each country can produce cameras and milk.The table below shows production per man-hour for each country.
$$\begin{array} { | l | c | c | } \hline & \begin{array} { l } \text { United } \\\text { States }\end{array} & \text { Carada } \\\hline \text { Carneras } & 6 & 2 \\\hline \text { Milk } & 1 & 2 \\\hline\end{array}$$
The United States has a labor force of 1,000 workers,and Canada has a labor force of 500 workers.
a)Use this information to graph production possibilities frontiers for both countries.Put cameras on the horizontal axis.
b)Assuming that a world price is established at which both countries can gain from trade,show possible consumption frontiers for each country.

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