Both Canada and the United States produce lumber and footballs with constant opportunity costs. The U.S can produce either 10 tons of lumber and no footballs or, 1,000 footballs and no lumber, or any combination in between. Canada can produce either 8 tons of lumber and no footballs, or 400 footballs and no lumber, or any combination in between.

1. Draw the PPF for U.S and Canada (2 separate diagrams) with footballs on the horizontal axis and lumber on the vertical axis.

2. IN autarky, if the U.S. wants to consume 500 footballs, how much lumber can it consume at the most? Label this point A in your diagram. Similarly, if Canada wants to consume 1 ton of lumber, how many footballs can it consume in autarky? Label this point C.

3. Which country has the comparative advantage in lumber production? In football production?