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Suppose two countries, Canada and Mexico, produce two goods, apparel (A) and motor vehicles (M) using the same factors and production technology. Assume that production

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Suppose two countries, Canada and Mexico, produce two goods, apparel (A) and motor vehicles (M) using the same factors and production technology. Assume that production of apparel is labor intensive, and production of motor vehicles is capital intensive. Both capital (K) and labor (L) are free to move between the two industries. Assume that when Canada has 100 units of K and 60 workers, while Mexico has 200 units of capital and 150 workers. a. What commodity would Canada export? Why? b. Draw the production possibility frontiers for the two countries? How are they similar and how do they differ? c. Explain how trade between Canada and Mexico would result in winners and losers? d. Explain how trade can result in the labor to capital ratio rising in both sectors in Canada

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