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Economics For Q9 and 11: Consider two countries Canada and Germany. Both countries produce only consumer goods and capital goods. Canada is assumed to have
Economics For Q9 and 11: Consider two countries Canada and Germany. Both countries produce only consumer goods and capital goods. Canada is assumed to have more workers than Germany and Germany is assumed to have more capital than Canada. Production of consumer goods are considered to be labor intensive and production of capital goods are considered to be capital intensive. 9. Suppose that Canada and Germany do not engage in international trade. Assuming the countries have identical consumer preferences, which country would have the cheaper relative price of consumer good? 10. With the opening of trade, what is most likely to occur in terms of the production of consumer goods in Canada? 11. With the opening of trade, what is most likely to occur in terms of the price of consumer goods in both countries
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