Answer Happy

1) Figure 4 shows that trade is based on differences in tastes because the PPFs for both nations are the same and the pretrade relative prices are different. 2) Figure 4 shows that trade is based on differences in tastes because the PPFs for both nations are different and the pretrade indifference curves are different. 3) Figure 4 shows that trade is based on differences in tastes because the PPFs for both nations are the same and the pretrade indifference curves are different. 4) Figure 4 shows that trade is based on differences in tastes because the PPFs for both nations are the same and the pretrade indifference curves are the same. Figure 4. The PPFs of Nation 1 and Nation 2 Corn (Tons) III B' A E B A' E' I' II' PB = 1