Given:

There are three countries 'X', 'Y', and 'Z'. They all produce cars and phones as follows:

X. Y. Z

cars (per day) 2,000 5,000 7,000

phone (per day) 5,000 10,000 7,000

Country 'X' can sign a bilateral trade agreement with 'Y' or 'Z'. Assume that the terms of trade (the price of car in terms of phone) is determined in a way that X takes all gains from trade. If it can choose only one country, which one should 'X' choose? (Assume that it cannot trade with the rest of the world) (hint: draw country X's CPF in both cases and compare them)