1.Imagine that there are 100,000 workers in Phoenix, and suppose they can either produce 200 cars or 3,000 smartphones in a year.

a.Draw the production possibilities frontier describing this situation.

b.What is the opportunity cost of producing one car in terms of smartphones? What is the opportunity cost of producing one smartphone in terms of cars?

c.Now suppose that a firm in Canada offers to trade 1 car in exchange for 20 smartphones, and that they are willing to repeat this deal for all the smartphones that the workers in Phoenix can produce. First assume the workers accept the deal. Draw their new consumption possibilities frontier. Now assume the workers ask for your advice before accepting the deal. What do you tell them to do?