Consider the Production Possibilities Frontiers for Countries A and B shown below and answer questions a-c about them.

Consider the Production Possibilities Frontiers for Countries A and B shown below and answer questions a-c about them.

a.     Which country has absolute advantage in producing cars? Calculate the opportunity cost of producing cars (in terms of truck) as part of your answer. (8pts)

b.    Before trade, Country A is producing 20 cars and 2 trucks and Country B is producing 9 cars and 1 truck. Assume the price of trade for 1 truck is 3 cars, what is the after-trade quantities of cars and trucks in each country, given these two countries will specialize per your answer in (a). Assume both country are willing to trade if not worse-off.(8pts)

c. what range do you expect the price of trade to be? Explain.(4pts)

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