The following table shows the cost of production per ton in steel industry and in coal industry in U.S. and in Germany:

U.S. dollars Germany euros

Steel 400 240

Coal 40 60

1. What are the domestic or internal terms of trade for Steel and for Coal?
2. According to either the Ricardian or Factor Endowment Theory of trade, is there a basis for trade between U.S. and Germany? Explain!
3. International trade involves multiple exchange rates which are subject to fluctuations. Is there a range of exchange rates (outer limits) between U.S. dollar and euro that would allow both nations gains from trade? What are the two outer limits of exchange rates?
4. At $1 =