Assume that there are two self-sufficient nations called US and MY. Both countries have to use their resources to provide consumer goods and capital goods for their own population. The table below shows the maximum amount of consumer goods and capital goods each country can produce using all of its resources.

	Consumer Goods	Capital Goods
MY	200	25
US	350	40

1- Assuming constant opportunity costs, draw the production possibility curve (PPC) for both nations.

2- Which country has the absolute advantage in producing consumer goods? Which country has the absolute advantage in producing capital goods? Explain your answer.

3- Do you think it is beneficial for the two countries to trade? Explain.

4- Using the data provided, determine which country has the comparative advantage in producing consumer goods and which country has the comparative advantage in producing capital goods. Show your calculations.

5- What will be the range in the terms of trade between the two countries?

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