Country C can produce 200 tons of wheat or 50million automobiles per year. Country D can produce 500tons of wheat or 125 million automobiles per year. The production possibilities curve for each country is linear.

1. What is the opportunity cost of wheat in each country? What is the opportunity cost of automobiles in each?

2. Which country has a comparative advantage in producing wheat? Why?

3. Should these two countries trade? If not, why not? If so, which country should produce wheat and which country should produce automobiles?