1. Suppose the country of Australia and the country of Canada produce only two goods, Steel and Aluminum. Suppose if Australia used all of their resources to produce Steel, they can produce 600 tons, and if they used all of their resources to produce Aluminum, they can produce 1,200 tons, or they can produce both aluminum and steel at a constant opportunity cost (linear production possibilities curve). Similarly, Canada can produce 1,600 tons of steel if they only made steel, or 800 tons of aluminum if they only made aluminum, or some combination of the two at a constant opportunity cost. a) Who has the comparative advantage in producing steel? Who has the comparative advantage in producing aluminum? (5 points) b) Suppose under Autarky (no trade), Canada would produce and consume 800 tons of steel and 400 tons of aluminum, while Australia would produce and consume 400 tons of steel and 400 tons of aluminum. what are the possible terms-of-trade that they could agree on? If they were going to trade give one example, if one exists, of what they could produce, trade, and consume that would make both economies better off (where they consume more of both goods). (15 points) c) In this example, is trade a zero-sum game? Explain why or why not. (10 points)