Question: Canada: vegetable : 5 units , Fish : 35 units US: vegetables : 8 unit, Fish : 40 units Terms of Trade: 1 V :

Canada: vegetable : 5 units , Fish : 35 units

US: vegetables : 8 unit, Fish : 40 units

Terms of Trade: 1 V : 6 F(The terms of trade dene the rate at which the two goods will trade post-specialization. Let us suppose that a bargaining process leads to agreement that one unit of Vegetable will trade for six units of Fish. Such a trading rate, one that lies between the opportunity costs of each economy, benets both economies)

(a) Draw PPFs of both countries

(b) Draw Consumption Possibility Frontier of two countries

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