Canada produces both lumber and wine, it exports lumber, and it imports wine. The rest of the world imports Canadian lumber and exports wine to Canada.
a. If Canada did not trade with the rest of the world, compare the equilibrium prices of lumber and wine in Canada with the world prices of lumber and wine.
b. Does Canada or the rest of the world have a comparative advantage in producing lumber? Does Canada or the rest of the world have a comparative advantage in producing wine?