Problem 3:

SupposethatFranceandGermanybothhave100unitseachofcapitalandlabor,andthat theysharethesameCRStechnologywithwhichtheyproducewineandcheese.However, tastes differinthetwocountries:consumersin Germanyhaveastrongpreferencefor cheese,andconsumersinFrancehaveastrongpreferenceforwine.Will therebetrade? What wouldyouexpectthepatternoftradetolooklike?Do youthinkwecanstilltalk about comparative advantage in this case?

(To answer, first draw the PPF - how do they look different/the same? - and then the indifference curves - how do they look different/the same? How do the price lines look? Without even drawing the PPFs and the indifference curves, where would you expect the relative price of cheese to be higher/lower?)