Answer Happy

Due day: Wednesday 29 June Send by email: 1 2 W 60- (a) What determines the internal equilibrium Pc/Pw in each nation in the absence of trade? (b) Starting with Fig. 2-12, explain what happens if the U.K. is in internal equilibrium in pro- duction and consumption at point B in the absence of trade, while the U.S. is in internal equi- librium in production and consumption at point B'. (c) What if the U.K. is in internal equi- librium in production and consumption to the right of B while the U.S. position is to the left of B'? 40- 20- 0 20 40 60 U.K. International economics 80 100 120 ECON340 Homework 2 140 160 C Fig. 2-12 W 120- 100- НО 60- 40 20 20 R N 40 US. 60 80 100 с (a) Why is the production possibilities curve of each nation usually different? (b) Is trade still possible between two nations if they have identical production possibilities curves? (c) Un- der what conditions can no trade take place between two nations with different production pos- sibilities curves? (d) What happens if two nations are identical in every respect?