Exercise 2 Consider the following input/output table. Indicate which country has a comparative advantage in the production of newsprint and which in chocolate. L/Q Canada Germany Newsprint Chocolate Il these two countries live in autarky, In Canada, what is the cost of one more unit of newsprint? In Canada, what is the cost of one more unit of chocolate? In Germany, what is the cost of one more unit of newsprint? In Germany, what is the cost of one more unit of chocolate? If these two countries have free trade with each other, Canada should specialize in the production of Germany should specialize in the production of Canada has 20,000,000 workers, Germany has 30,000,000. Draw the production possibilities frontiers. Put newsprint on the horizontal axis. Consider the following input/output table. Indicate which country has a comparative advantage in the production of pulp and which in keyboards. L/Q Canada USA Pulp Keyboard Labor (millions) Opportunity Cost Canada USA Pulp Keyboard If these two countries live in autarky, In Canada, what is the cost of one more unit of pulp? unit(s) of In Canada, what is the cost of one more keyboard? unit(s) of doud In the U.S.A., what is the cost of one more unit of pulp? unit(s) of In the U.S.A, what is the cost of one more keyboard? unit(s) of If these two countries have free trade with each other. Canada should specialize in the production of The U.S.A. should specialize in the production of Draw the production possibilities frontier for both countries, Put pulp (Thyr) on the horizontal axis. Canada USA