Production Possibilities Tables for Germany and Canada (note that we are assuming that opportunity costs remain constant along the production possibilities frontier), and that each country produces only these two products).
Germany's Production Possibilities Table
Production Alternatives
ProductABCD
Autos04080120
Computers6040200
Canada's Production Possibilities Table
Production Alternatives
ProductA'B'C'D’
Autos060120180
Computers12080400
Since Canada can produce more of either product than Germany can, is there any reason for Canada and Germany to engage in trade? Explain.
a) US parents begin buying fewer Chinese made toys for their children.
b) US interest rates rise relative to interest rates in China, so Chinese residents seek to purchase additional US financial assets.
c) Chinese furniture manufacturers produce high quality early American furniture and successfully export large quantities
Germany's Production Possibilities Table
Production Alternatives
ProductABCD
Autos04080120
Computers6040200
Canada's Production Possibilities Table
Production Alternatives
ProductA'B'C'D’
Autos060120180
Computers12080400
Since Canada can produce more of either product than Germany can, is there any reason for Canada and Germany to engage in trade? Explain.
a) US parents begin buying fewer Chinese made toys for their children.
b) US interest rates rise relative to interest rates in China, so Chinese residents seek to purchase additional US financial assets.
c) Chinese furniture manufacturers produce high quality early American furniture and successfully export large quantities