1. Suppose that each worker in Finland can produce four phones or two cars. Assume that Finland has ten workers. a) Graph the production possibilities frontier for Finland b) What is the no-trade relative price of phones in Finland? 2. Suppose that each worker in Sweden can produce two phones or four cars. Assume that Sweden has ten workers. a) Graph the production possibilities frontier for Sweden b) What is the no-trade relative price of phones in Sweden? c) Using the information provided in Problem 1 regarding Finland, in which good does Sweden have a comparative advantage and why? 3. Suppose that in the absence of trade, Finland consumes 28 phones and six cars, while Sweden consumes six phones and 28 cars. Add the indifference curve for each country to the figures in Problems 1 and 2. Label the production possibilites frontier (PPF), indifference curve (U1), and the no-trade equilibrium consumption and production for each country. 4. Now suppose the world relative price of phones is Pphone/Pcar = 1. a) In what good will each country specialize? Briefly explain why. b) Graph the new world price line for each country in the figures in Problem 3, and add a new indifference curve (U2) for each country in the trade equilibrium. c) Label the exports and imports for each country. How does the amount of Finnish exports compare with Swedish imports? d) Does each country gain from trade? Briefly explain why or why not.