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international economy class, chapter three, comparative advantage and gain from trade

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Suppose that the table in Study Question 3.1 looks as follows. Use the information to
answer questions a through f.
Output per Hour Worked
1 kilogram
2 kilograms
0.25 car
2 cars
a. Which country has an absolute advantage in cheese? In cars?
b. What is the relative price of cheese in France if it does not trade? In Germany?
c. What is the opportunity cost of cheese in France? In Germany?
d. Which country has a comparative advantage in cheese? In cars? Explain your
e. What are the upper and lower bounds for the trade price of cheese?
f. Draw a hypothetical PPC for France and label its slope. Suppose that France
follows its comparative advantage in deciding where to produce on its PPC.
Label its production point. If the trade price of cars is 5 kilograms of cheese per
car, draw a trade line (CPC) showing how France can gain from trade.

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